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Exhibit 10.12
LOAN AGREEMENT
THIS LOAN AGREEMENT (this "Loan Agreement"), is made and entered into as of the
23rd day of December, 1996, by and among (i) (a) PNC BANK, KENTUCKY, INC., a
Kentucky banking corporation with principal office and place of business in
Louisville, Kentucky ("PNC"), (b) NATIONAL CITY BANK OF KENTUCKY, a national
banking association with principal office and place of business in Louisville,
Kentucky ("National City"), (c) SUNTRUST BANK, NASHVILLE, N.A., a national
banking association with principal office and place of business in Nashville,
Tennessee ("SunTrust"), (d) BANK ONE, KENTUCKY, NA, a national banking
association with principal office and place of business in Louisville, Kentucky
("Bank One") (PNC, National City, SunTrust and Bank One are hereinafter
collectively referred to as the "Banks", and each is hereinafter individually
referred to as a "Bank"); (ii) PNC BANK, KENTUCKY, INC., in its capacity as the
administrative bank hereunder (in such capacity the "Administrative Bank"); and
(iii) RES-CARE, INC., a Kentucky corporation with principal office and place of
business in Louisville, Kentucky ("Res-Care") and each of the Consolidated
Subsidiaries of Res-Care identified on Schedule 1 hereto (Res-Care and each
Consolidated Subsidiary, a "Borrower," and all of the foregoing collectively,
the "Borrowers").
P R E L I M I N A R Y S T A T E M E N T:
A. The Borrowers desire to obtain from the Banks a revolving line of
credit in the principal amount of Sixty Five Million Dollars ($65,000,000.00)
(as defined in Section 1 hereof, the "Revolving Credit Facility").
B. The Borrowers desire to obtain from the Banks a commitment to issue
letters of credit for the account of the Borrowers in an aggregate outstanding
amount of up to Ten Million ($10,000,000.00) at any one time, as a subfacility
under the Revolving Credit Facility (as defined in Section 1 hereof, the "Letter
of Credit Subfacility").
C. The Borrowers desire to obtain from PNC a swing line revolving line
of credit in the principal amount of Seven Million Five Hundred Thousand Dollars
($7,500,000) (as defined in Section 1 hereof, the "Swing Line Credit Facility")
D. The Banks desire to establish the Revolving Credit Facility and the
Letter of Credit Subfacility in favor of the Borrowers, and PNC desires to
establish the Swing Line Facility in favor of the Borrowers, in each case upon
the terms and conditions set forth herein.
E. Res-Care and the other Borrowers will benefit from the extension of
the Revolving Credit Facility, the Letter of Credit Subfacility and the Swing
Line Credit Facility because such extensions of credit will enable Res-Care and
the other Borrowers to have available and to draw from time to time credit that
would not otherwise be available to Res-Care and the other Borrowers.
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F. Res-Care obtained from PNC, National City and SunTrust certain credit
accommodations pursuant to an Amended and Restated Loan Agreement dated as of
April 26, 1995, as amended by Second Amendment to Loan Instruments dated as of
February 16, 1996 (together, the "Old Loan Agreement"), including the following:
(i) a revolving line of credit in the principal amount of Thirty Five Million
Dollars ($35,000,000), (ii) a term loan in the principal of Four Million Dollars
($4,000,000), (iii) a commitment to issue letters of credit for the account of
the Borrower in an aggregate outstanding amount of up to Two Million Dollars
($2,000,000) at any one time and (iv) a commitment to enter into equipment
leases with the Borrower that obligated PNC to purchase equipment for lease to
the Borrower having an aggregate cost of up to Seven Hundred Thousand Dollars
($700,000). A portion of the proceeds of the loans under this Loan Agreement
will be used to satisfy the obligations of Res-Care under the Old Loan
Agreement. The Old Loan Agreement and the notes executed in connection therewith
will be deemed satisfied and terminated upon the execution and delivery of this
Loan Agreement and the satisfaction of all closing conditions set forth in
Section 5 hereof.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements set forth herein and for other good and valuable
consideration, the mutuality, receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:
SECTION 1
DEFINITIONS AND CROSS REFERENCE
Certain terms used in this Loan Agreement are defined in this Section 1;
other terms are defined elsewhere in this Loan Agreement.
1.1 "Accounts Receivable" means all (a) rights to payment for any goods
sold or services performed, whether such right to payment exists on the date of
this Loan Agreement or is created thereafter, and whenever and wherever
acquired, whether or not such right to payment has been earned by performance,
and whether or not such right to payment is evidenced by any document,
instrument or chattel paper, and all claims against common carriers for goods
and Inventory lost in transit; and (b) the proceeds or products of any of the
foregoing. The term "Accounts Receivable" includes the term "account" as defined
in KRS 355.9-106. The amount of an Account Receivable shall be the amount of the
receivable net of all discounts.
1.2 "Administrative Bank" has the meaning assigned to that term in the
introduction to this Loan Agreement.
1.3 "Advance" means with respect to any Borrower, each and every advance
of proceeds under the Revolving Credit Facility, the Letter of Credit
Subfacility, or the Swing Line Credit Facility, directly or indirectly, to such
Borrower, regardless of whether such advance is accounted for under GAAP as an
extension of credit, a contribution of capital or otherwise.
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1.4 "Affiliate" means, as applied to any Person, (i) any other Person
directly or indirectly controlling, controlled by, or under common control with,
that Person, (ii) any other Person that, directly or indirectly, owns or
controls, whether beneficially or as a trustee, guardian or other fiduciary, 10%
or more of the stock having ordinary voting power in the election of directors
of such Person, or (iii) each of such Person's directors and officers appointed
by the board of directors of such Person. For the purposes of this definition,
"control" (including with correlative meanings, the terms "controlling,"
"controlled by" and "under common control with") , as applied to any Person,
means the possession, directly or indirectly, of the power to direct or cause
the direction of the management and policies of that Person, whether through the
ownership of voting securities or by contract or otherwise.
1.5 "And/or" means one or the other or both, or any one or more or all,
of the things or persons or parties in connection with which the conjunction is
used.
1.6 "Applicable Base Rate Margin" means the applicable per annum
percentage set forth in the table appearing in Section 2.2A hereof, with respect
to Base Rate Loans.
1.7 "Applicable Euro-Rate Margin" means the applicable per annum
percentage set forth in the table appearing in Section 2.2A hereof, with respect
to Euro-Rate Loans.
1.8 "Applicable Commitment Fee Percentages" means the applicable per
annum percentage set forth in the table appearing in Section 2.3B hereof, with
respect to the calculation of Revolving Credit Commitment Fees.
1.9 "Applicable Letter of Credit Percentages" means the applicable per
annum percentage set forth in the table appearing in Section 2.7F of the Loan
Agreement.
1.10 "Application and Agreement For Letter of Credit" means the document
substantially in the form of Exhibit C annexed hereto, with appropriate
insertions and deletions, with respect to the proposed issuance or amendment of
a Letter of Credit.
1.11 "Assignment Agreement" means an Assignment Agreement between an
assigning Bank and its assignee, substantially in the form of Exhibit H annexed
hereto.
1.12 "Assumption Agreement" means an Assumption Agreement in favor of
the Administrative Bank, for the benefit of the Banks, executed and delivered by
a Consolidated Subsidiary that becomes a Borrower subsequent to the Closing
Date, pursuant to the requirement of Section 7.10 hereof, substantially in the
form of Exhibit M hereto.
1.13 "Authorized Officer" means the President, the Financial Officer and
any other officer of Res-Care, for itself and as agent for the other Borrowers,
who, by the Articles of Incorporation, Bylaws or Resolutions of the Board of
Directors of such Borrower, is authorized to execute and deliver this Loan
Agreement and the other Loan Instruments on behalf of such Borrower.
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1.14 "Banks" has the meaning assigned to that term in the introduction
to this Loan Agreement.
1.15 "Bankruptcy Code" means Title 11 of the United States Code entitled
"Bankruptcy" as now and hereafter in effect, or any successor statute.
1.16 "Base Rate" means the variable rate per annum equal to the higher
of (i) the Federal Funds Effective Rate plus one half of one percent (0.5%), as
the same may change from time to time, or (ii) the Prime Rate, as the same may
change from time to time.
1.17 "Base Rate Loan" means Revolving Credit Loans bearing interest at
rates determined with reference to the Base Rate, as the same may change from
time to time as provided in Section 2.2A.
1.18 "▇▇▇▇▇▇▇ Acquisition" means the acquisition and/or sublease by
certain Consolidated Subsidiaries of Res-Care of twelve (12) intermediate care
facilities for persons with developmental disabilities and/or mental retardation
located in California, Illinois, Kansas and Texas, upon the terms and conditions
set forth in that certain Agreement dated April 5, 1995, among Res-Care, RSCRC,
RCI, RCK, and RSCRT, ▇▇▇▇▇▇▇ Health and Rehabilitation Services, Inc., ▇▇▇▇▇▇▇
Enterprises-California, Inc., ▇▇▇▇▇▇▇ Enterprises-Illinois, Inc., ▇▇▇▇▇▇▇
Enterprises-Kansas, Inc. and ▇▇▇▇▇▇▇ Enterprises-Texas, Inc., each a California
corporation, as amended.
1.19 "▇▇▇▇▇▇▇ Note" means, collectively, (i) that certain Purchase Money
Note dated May 1, 1995, made by RSCRT, payable to the order of ▇▇▇▇▇▇▇ Health
and Rehabilitation Services, Inc., and in the face principal amount of Three
Million Dollars ($3,000,000.00), together with all amendments, modifications,
extensions, renewals, restatements and replacements thereof, and (ii) that
certain Purchase Money Note dated May 1, 1995, made by RSCRT, payable to the
order of ▇▇▇▇▇▇▇ Health and Rehabilitation Services, Inc., and in the face
principal amount of Six Hundred Thousand Dollars ($600,000.00), together with
all amendments, modifications, extensions, renewals, restatements and
replacements thereof.
1.20 "Borrowers" means each and any of the Persons identified as
"Borrowers" in Schedule 1 to this Loan Agreement, as it may be amended from time
to time to include as "Borrowers" any new Consolidated Subsidiaries hereafter
acquired or created, pursuant to the provisions of Section 7.10 hereof.
1.21 "Borrowers' Loan Accounts" means the accounts respectively on the
books of the Banks in which will be recorded Revolving Credit Loans made by the
Banks to the Borrowers, payments made on such Revolving Credit Loans and other
appropriate debits and credits as provided by this Loan Agreement.
1.22 "Business Combination" means any acquisition or merger, whether
accounted for under GAAP as a purchase or pooling of interests and regardless of
whether the value of the consideration paid or received is comprised of cash,
assets, common stock, preferred stock, partnership interests, limited liability
company or limited liability partnership interests.
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1.23 "Business Combination Consideration" means the aggregate legal
consideration paid by Res-Care and/or its Consolidated Subsidiaries in
connection with a Business Combination, which legal consideration shall be the
sum of the consideration granted by the Borrowers (whether by cash, stock or
other means), plus the amount of the acquired entity's debt assumed or
refinanced by the Borrowers (and excluding any of the acquired entity's debt not
assumed or refinanced by the Borrowers).
1.24 "Business Day" means any day excluding Saturday, Sunday and any day
which is a legal holiday under the laws of the Commonwealth of Kentucky or is a
day on which banking institutions located in the Commonwealth of Kentucky are
authorized or required by law or other governmental action to close.
1.25 "Cash Flow from Operations" means the sum of the amounts for the
period in question of (i) Net Income, (ii) Interest Expense, (iii) provisions
for taxes based on income, (iv) depreciation, amortization and other non-cash
charges to Net Income, minus non-cash credits to Net Income, of the Borrowers on
a consolidated basis in accordance with GAAP, determined as of the end of each
Fiscal Quarter, for the previous four Fiscal Quarters. The Borrowers may include
in the calculation of "Cash Flow from Operations" the sum of (i), (ii), (iii)
and (iv) for the 12 months preceding the date of calculation for any entity that
has been acquired in a Permitted Business Combination; provided, however, that:
(a) if the sum of (i), (ii), (iii) and (iv) that is based in whole or in
part upon pre-acquisition unaudited financial results of entities acquired in
Permitted Business Combinations (the "Pre-Acquisition Financial Results") equals
or exceeds twenty five percent (25%) (the "Cash Flow from Operations
Limitation") of the total "Cash Flow from Operations" of the Borrowers for the
period being measured, then the calculation of total "Cash Flow from Operations"
may include the portion of the Pre-Acquisition Financial Results that is equal
to the Cash Flow from Operations Limitation but must exclude the portion of
Pre-Acquisition Financial Results that exceeds the Cash Flow from Operations
Limitation;
(b) if the calculation of "Cash Flow from Operations" is performed at
any time from the beginning of the seventh month after the date of acquisition
of an entity until the end of the twelfth month following the acquisition, the
calculation with respect to such entity shall be based upon the actual financial
results of such entity for the period occurring after the acquisition,
annualized on a 12-month basis; and
(c) Net Income for purposes of the calculation of Cash Flow from
Operations shall not include any Net Income of a Borrower derived from such
Borrower's ownership of a Person that is not a Consolidated Subsidiary except to
the extent such Borrower has received a distribution of such Net Income from
such Person.
1.26 "Change in Control" means the acquisition by any Person or "group"
(as defined in Section 13 (d) (3) of the Securities Exchange Act of 1934, as
amended) of more than 50% of the Voting Stock of Res-Care, including any such
acquisition by merger or consolidation.
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1.27 "Closing Fees" means the Closing Fees described in Section 2.3A
hereof and set forth in Schedule 2.3A hereto.
1.28 "Closing Date" means December 23, 1996.
1.29 "Compliance Certificate" means a certificate substantially in the
form of Exhibit G annexed hereto delivered by the Borrowers to the
Administrative Bank pursuant to Section 7.3(iii) hereof.
1.30 "Confidentiality Agreement" means a Confidentiality Agreement
between a potential assignee Bank and the Borrowers substantially in the form of
Exhibit I annexed hereto.
1.31 "Consolidated Subsidiary" means each Subsidiary of Res-Care whose
accounts are or should be consolidated with those of Res-Care in accordance with
GAAP. As of the Closing Date, the Consolidated Subsidiaries of Res-Care are
listed on Schedule 6.13.
1.32 "Contingent Obligations" means, with respect to the Borrowers, any
direct or indirect liability, contingent or otherwise (excluding all
transactions which, on a consolidated basis under GAAP, should be eliminated) of
the Borrowers, (i) with respect to any indebtedness, lease, dividend, letter of
credit or other obligation of another if the primary purpose or intent thereof
by the Borrowers is to provide assurance to the obligee of such obligation of
another that such obligation of another will be paid or discharged, or that any
agreements relating thereto will be complied with, or that the holder of such
obligation will be protected (in whole or in part) against loss in respect
thereof, or (ii) under any letter of credit issued for the account of the
Borrowers or for which the Borrowers are otherwise liable for reimbursement
thereof, or (iii) under interest rate swap agreements, interest rate collar
agreements or other similar arrangements providing interest rate protection.
Contingent Obligations shall include, without limitation, (a) the direct or
indirect guaranty, endorsement (otherwise than for collection or deposit in the
ordinary course of business), co-making, discounting with recourse or sale with
recourse by the Borrowers of the obligation of another, and (b) any liability of
the Borrowers for the obligations of another through any agreement (contingent
or otherwise) (1) to purchase, repurchase, or otherwise acquire such obligation
or any security therefor, or to provide funds for the payment or discharge of
such obligation (whether in the form of loans, advances, stock purchases,
capital contributions or otherwise), (2) to maintain the solvency of any balance
sheet item, level of income or financial condition of another, or (3) to make
take-or-pay or similar payments if required regardless of non-performance by any
other party or parties to an agreement, in the case of any agreement described
under subclauses (1), (2) or (3) of this sentence the primary purpose or intent
thereof is as described in clause (i) of the preceding sentence. The amount of
any Contingent Obligation, as at any time of determination, shall be equal to
the amount of the obligation so guaranteed or otherwise supported at such time
of determination which amount shall be deemed to be the amount of such
obligation guaranteed, as reasonably estimated by the Borrowers, if such amount
cannot be specifically determined at the time of determination.
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1.33 "Continuing Director" means any member of the Board of Directors of
Res-Care who is a member of such Board on the Closing Date and any Person who is
a member of such Board and whose nomination as a director was approved by a
majority of the Continuing Directors then on the Board of Directors of Res-Care.
1.34 "Covered Tax" means any Tax that is not an Excluded Tax.
1.35 "Current Maturities of Long Term Debt" means the current principal
maturities of all indebtedness for borrowed money (including but not limited to
amortization of capitalized lease obligations) having an original term of one
year or more.
1.36 "Current Ratio" means, as of any date of determination thereof, the
ratio of current assets to current liabilities existing on such date, all as
determined in accordance with GAAP.
1.37 "Date of Determination" means, for purposes of determining the
applicable Pricing Level on any Pricing Level Calculation Date, the last day of
the most recently ended calendar month.
1.38 "Debts" means the present value, as of the Enforcement Date, of
known probable liabilities of any Borrower, whether matured or unmatured,
liquidated or unliquidated, absolute, fixed or contingent (other than (i) any
liabilities under this Loan Agreement, (ii) any guaranty that is subordinated in
right of payment to obligations of such Borrower under this Loan Agreement, and
(iii) all intercompany indebtedness owed by such Borrower to Res-Care or another
Borrower, as such term is defined in the Loan Agreement, to the extent that such
intercompany indebtedness owed by such Borrower may be discharged by offsetting
the amount paid by such Borrower under this Loan Agreement against such
intercompany indebtedness, whether such offset may be effected by operation of
law, pursuant to implied or express contractual rights, whether relating to
intercompany accounts or rights of contribution or subrogation, or otherwise),
with contingent or unliquidated liabilities being measured at the amount which,
in light of all the facts and circumstances existing as of the Enforcement Date,
represents the amount which could reasonably be expected to become an actual or
matured liability.
1.39 "Default Rate" means, (i) for any Revolving Credit Loan bearing
interest as a Base Rate Loan or as a Euro-Rate Loan, and (ii) for any Swing Line
Loan, the Base Rate plus the Applicable Base Rate Margin plus two percent (2%).
1.40 "Designated Interest Rate Agreement" shall have the meaning set
forth in Section 8.13 hereof.
1.41 "Dollars" or "$" means lawful currency of the United States of
America.
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1.42 "EBIT" means, for the period in question, the sum of the amounts
for such period of the Borrowers' (i) Net Income, (ii) Interest Expense, and
(iii) provisions for taxes based on income.
1.43 "Enforcement Date" means the earlier of the date of the
commencement of a case under Title 11 of the United States Code involving
Res-Care or any Consolidated Subsidiary or the date enforcement under this Loan
Agreement is sought.
1.44 "Equipment Lease" means each equipment lease now or hereafter
executed by the Borrowers and PNC.
1.45 "ERISA" means the Employee Retirement Income Security Act of 1974,
as amended from time to time, and any successor statute.
1.46 "Euro-Rate" means, with respect to Euro-Rate Loans, the interest
rate per annum determined by the Administrative Bank by dividing (the resulting
quotient rounded upward to the nearest 1/100th of 1% per annum) (i) the rate of
interest determined by the Administrative Bank in accordance with its usual
procedures (which determination shall be conclusive and binding upon the
Borrowers, absent manifest error on the part of the Administrative Bank) to be
equal to the offered rate for deposits in Dollars for the applicable Interest
Period which appear on Page 3750 of the TELERATE rate reporting system or other
similar system as of approximately 11 a.m, Greenwich Mean Time, two (2) Business
Days prior to the first day of such Interest Period and having a borrowing date
and a maturity comparable to such Interest Period by (ii) a number equal to 1.00
minus the Euro-Rate Reserve Percentage. The Euro-Rate may also be expressed by
the following formula:
Euro-Rate = Offered rate on TELERATE page 3750
-----------------------------------
1.00 - Euro-Rate Reserve Percentage
1.47 "Euro-Rate Loans" means Revolving Credit Loans bearing interest at
rates determined by reference to the Euro-Rate as provided in Section 2.2A
hereof.
1.48 "Euro-Rate Reserve Percentage" of the Administrative Bank for the
Interest Period for any Euro-Rate Loan means the reserve percentage applicable,
if any, during such Interest Period (or, if more than one such percentage shall
be so applicable, the daily average of such percentages for those days in such
Interest Period during which any such percentage shall be so applicable) under
regulations issued from time to time by the Board of Governors of the Federal
Reserve System (or any successor) for determining the maximum reserve
requirement (including, without limitation, any emergency, supplemental or other
marginal reserve requirement) for the Administrative Bank with respect to
liabilities or assets consisting of or including eurocurrency liabilities
(within the meaning of that term in Regulation D of the Board of Governors of
the Federal Reserve System, as in effect from time to time) having a term equal
to such Interest Period.
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1.49 "Events of Default" means the occurrence or happening of any of the
matters set forth in Section 9 hereof.
1.50 "Excluded Tax" means any of the following taxes, levies, imposts,
duties, deductions, withholdings or charges, and all liabilities with respect
thereto: (i) Taxes imposed on the net income of any Bank or a Tax Transferee
(including without limitation branch profits taxes, minimum taxes and taxes
computed under alternative methods, at least one of which is based on net
income) (collectively referred to as "net income taxes") by (A) the United
States of America, (B) the jurisdiction under the laws of which such Bank or Tax
Transferee is organized or any political subdivision thereof, or (C) the
jurisdiction of such Bank's or Tax Transferee's applicable lending office or any
political subdivision thereof, or (D) any jurisdiction in which such Bank or Tax
Transferee is doing business, (ii) any Taxes to the extent that they are in
effect and would apply to a payment to any Bank as of the Closing Date, or as of
the date such Person becomes a Bank, in the case of any assignee pursuant to
Section 13 hereof, (iii) any Taxes that are in effect and would apply to a
payment to a Tax Transferee as of the date of acquisition of any portion of the
Revolving Credit Loans by such Tax Transferee or the date of the change of
lending office of such Tax Transferee, as the case may be (provided however that
a Person shall not be considered a Tax Transferee for purposes of this clause
(iii) as a result of a change of its lending office or the taking of any other
steps pursuant to Section 4.4 hereof), (iv) any Taxes to the extent of any
credit or other Tax benefit available to any Bank or Tax Transferee, as
applicable, as a result thereof, or (v) any Taxes that would not have been
imposed but for the failure by any Bank or Tax Transferee, as applicable, to
provide and keep current any certification or other documentation required to
qualify for an exemption from or reduced rate of any Tax.
1.51 "Facility" or "Facilities" means each facility, program, group home
and training center now or hereafter owned, operated and/or managed by any of
the Borrowers at which the services or programs described in Section 8.5 hereof
are provided by the Borrowers.
1.52 "Fair Saleable Value" of any assets means the amount which may be
realized as of the Enforcement Date, within a reasonable time, either through
collection of such assets or sale of such assets at the regular market value,
understanding "regular market value" to mean the amount which could be obtained
for the assets in question within such period by a capable and diligent
businessman from an interested buyer who is willing to purchase under ordinary
selling conditions.
1.53 "Federal Funds Effective Rate" for any day shall mean the rate per
annum (based on a year of 360 days and actual days elapsed and rounded upward to
the nearest 1/100 of 1%) announced by the Federal Reserve Bank of New York (or
any successor) on such day as being the weighted average of the rates on
overnight Federal funds transactions arranged by Federal funds brokers on the
previous trading day, as computed and announced by such Federal Reserve Bank (or
any successor) in substantially the same manner as such Federal Reserve Bank
computes and announces the weighted average it refers to as the "Federal Funds
Effective Rate" as of the date of this Agreement; provided, if such Federal
Reserve Bank (or its successor) does
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not announce such rate on any day, the "Federal Funds Effective Rate" for such
day shall be the Federal Funds Effective Rate for the last day on which such
rate was announced.
1.54 "Financial Officer" means the chief financial officer of Res-Care
or other officer who is the highest ranking officer with responsibility for the
financial affairs of Res-Care.
1.55 "Fiscal Quarter" means a fiscal quarter of the Borrowers. The
Fiscal Quarters of the Borrowers currently end on the last day of each March,
June, September and December of each calendar year.
1.56 "Fiscal Year" means a fiscal year of the Borrowers. The Borrowers'
current Fiscal Year ends on the last day of December of each calendar year.
1.57 "Fixed Charge Coverage Ratio" means, as of any Date of
Determination thereof, the ratio of (i) the sum of the Borrowers' EBIT and
Operating Lease/Rental Expense to (ii) the sum of the Borrowers' Interest
Expense, Operating Lease/Rental Expense and Current Maturities of Long Term
Debt.
1.58 "Funding Date" means the date of the funding of a Revolving Credit
Loan.
1.59 "GAAP" means generally accepted accounting principles set forth in
the opinions and pronouncements of the Accounting Principles Board of the
American Institute of Certified Public Accountants and the statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as may be approved by a significant segment of
the accounting profession, which are applicable to the circumstances as of the
date of determination, as applied in accordance with the modifications contained
in Section 1.117 hereof.
1.60 "General Intangibles" means all intangible personal property
(including things in action) other than goods, accounts, chattel paper,
documents and instruments (all as defined in the Uniform Commercial Code),
whether such personal property is owned on the date of this Loan Agreement, or
is acquired thereafter, and shall include, but is not limited to, all existing
and future royalties, rights, claims, benefits and proceeds in, under or to any
franchise agreements, insurance policies, customer lists, choice in action,
books, records, patents and patents applications, copyrights, trademarks, trade
names, trade secrets, sales contracts, licenses, certificates of need, permits,
tax and any other types of refunds, returned and unearned insurance premiums,
claims, product designs, drawings, technical data, computer programs, computer
tapes and software, catalogs, blue prints, contract rights, and all rights as an
unpaid vendor or lienor, including stoppage in transit, replevin or reclamation.
The term "General Intangible" includes "general intangible" as defined in KRS
355.9-105.
1.61 "Indebtedness" means, with respect to the Borrowers on a
consolidated basis in accordance with GAAP, (i) all indebtedness for borrowed
money, including, without limitation, all Revolving Credit Loans, all Swing Line
Loans, all reimbursement obligations of the Borrowers in respect of all letters
of credit, including the Letters of Credit, issued for the
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account of the Borrowers, and all obligations of the Borrowers under all
Equipment Leases, (ii) that portion of obligations with respect to capital
leases which is properly classified as a liability on a balance sheet in
conformity with GAAP, (iii) notes payable and drafts accepted representing
extensions of credit whether or not representing obligations for borrowed money,
(iv) any obligation owed for all or any part of the deferred purchase price of
property or services which purchase price is (y) due more than six months from
the date of incurrence of the obligation in respect thereof, or (z) evidenced by
a note or similar written instrument, but excluding trade payables incurred in
the ordinary course of business, (v) all indebtedness secured by any lien on any
property or asset owned by the Borrowers regardless of whether the indebtedness
secured thereby shall have been assumed by the Borrowers or is non-recourse to
the credit of the Borrowers but only to the extent of the fair market value of
any such property or assets, and (vi) all other Contingent Obligations of the
Borrowers not otherwise included in clauses (i) through (v) of this Section .
1.62 "Interest Expense" means, for the period in question, total
interest expense (including that attributable to capital leases in conformity
with GAAP) of the Borrowers with respect to all outstanding Indebtedness of the
Borrowers, including, without limitation, all capitalized interest, all
commissions, discounts and other fees and charges owed with respect to letters
of credit and bankers' acceptance financing and net costs and benefits under
interest rate agreements, whether payable in cash or accrued (including
amortization of discount), all as determined on a consolidated basis in
accordance with GAAP.
1.63 "Interest Payment Date" means, (i) with respect to each Base Rate
Loan, the last day of each calendar quarter during which such Base Rate Loan is
outstanding in whole or in part, (ii) with respect to each Euro-Rate Loan, the
ninetieth (90th) day of the Interest Period applicable to such Euro-Rate Loan,
and/or the last day of the Interest Period applicable to such Euro-Rate Loan,
and (iii) with respect to each Swing Line Loan, the last day of each calendar
quarter during which such Swing Line Loan is outstanding in whole or in part,
and (iv) with respect to all Revolving Credit Loans and Swing Line Loans, the
date of maturity thereof.
1.64 "Interest Period" means any interest period applicable to a
Euro-Rate Loan, as determined pursuant to Section 2.2B hereof.
1.65 "Interest Rate Agreement" means any interest rate swap agreement,
interest rate cap agreement, interest rate collar agreement or other similar
agreement.
1.66 "Interest Rate Determination Date" means each date for calculating
the Euro-Rate for purposes of determining the interest rate in respect of an
Interest Period. The Interest Rate Determination Date shall be the date which is
two (2) Business Days prior to the related Interest Period for a Euro-Rate Loan.
1.67 "Internal Revenue Code" means the Internal Revenue Code of 1986, as
amended to the date hereof and from time to time hereafter.
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1.68 "Letters of Credit" means all letters of credit or similar
instruments issued by PNC for the account of the Borrowers pursuant to Section
2.7 of the Loan Agreement for the purpose of securing the performance, payment,
deposit or surety obligations of Res-Care or a Subsidiary (including any such
obligations of Res-Care or a Subsidiary under applicable workers compensation
laws).
1.69 "Letter of Credit Subfacility" means the commitment of PNC, to
issue Letters of Credit for the account for Res-Care or a Subsidiary up to an
aggregate amount at any one time outstanding of Ten Million Dollars
($10,000,000). The Letter of Credit Subfacility is a sublimit of the Revolving
Credit Facility.
1.70 "Letter of Credit Fee" has the meaning assigned to that term in
Section 2.7F(i) hereof.
1.71 "Letter of Credit Fronting Fee" has the meaning assigned to that
term in Section 2.7F(v) hereof.
1.72 "Letter of Credit Usage" means, as at any date, the sum of (i) the
maximum aggregate amount which is or at any time thereafter may become available
for drawing under all Letters of Credit then outstanding, plus (ii) the
aggregate amount of all drawings under all Letters of Credit honored by PNC and
not theretofore reimbursed by the Borrowers to PNC, whether by virtue of the
Banks making a Revolving Credit Loan to the Borrowers to enable the Borrowers to
reimburse PNC for such drawing or otherwise.
1.73 "Loan Agreement" means this Loan Agreement as further amended,
supplemented or otherwise modified from time to time.
1.74 "Loan Instruments" means this Loan Agreement, the Revolving Credit
Notes, the Swing Line Note, each Application and Agreement for Letter of Credit,
the Stock Pledge Agreement, the Security Agreements and all other agreements,
documents and instruments now or hereafter evidencing and/or pertaining to this
Loan Agreement and/or the other Obligations, and as may be further amended,
supplemented or otherwise modified from time to time.
1.75 "Maximum Consolidated Subsidiary Borrower Amount" means the excess
of (A) the aggregate Fair Saleable Value of the assets of a Borrower that is a
Consolidated Subsidiary on the Enforcement Date over (B) the amount of Debts of
such Consolidated Subsidiary on the Enforcement Date.
1.76 "Net Income" means, for the period in question, the net income (or
loss) of the Borrowers for such period taken as a single accounting period,
determined on a consolidated basis in accordance with GAAP and excluding any
extraordinary items; provided, however, that Net Income shall include the
reversal of reserves that had previously been charged against Net Income.
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1.77 "Net Worth" means, as at any date on which the amount thereof shall
be determined, the shareholders' equity of Res-Care as determined on a
consolidated basis in accordance with GAAP.
1.78 "Notice of Conversion/Continuation" means the Notice in the form of
Exhibit D annexed hereto with respect to the conversion and/or continuation of
the interest rate(s) applicable to the Revolving Credit Loans.
1.79 "Obligations" means, collectively, (i) the entire unpaid principal
balance of and all interest now accrued or hereafter to accrue on the Revolving
Credit Notes, (ii) the entire unpaid principal balance of and all interest now
accrued or hereafter to accrue on the Swing Line Note, (iii) the obligation of
the Borrowers to reimburse PNC for all drafts honored by PNC under Letters of
Credit together with accrued interest thereon, (iv) the obligation of the
Borrowers to pay all rent and all other amounts now or hereafter due under all
Equipment Leases now or hereafter entered into by the Borrowers and PNC, (v) the
performance of all of the covenants, agreements and obligations of the Borrowers
hereunder and under the other Loan Instruments, and (vi) all other liabilities,
obligations, covenants and duties owing by the Borrowers to any Bank arising
under or pursuant to this Loan Agreement or the other Loan Instruments of any
kind or nature, present or future, and whether or not evidenced by any note,
guaranty or other instrument. The term "Obligations" includes, without
limitation, all interest, charges, expenses, reasonable attorneys' fees and any
other sums chargeable to the Borrowers under this Loan Agreement and/or any
other Loan Instrument.
1.80 "Offered Rate" means the interest rate quoted from time to time by
PNC to the Borrowers as applicable to Swing Line Loans made or to be made by PNC
to the Borrowers for an Offered Rate Period. The Offered Rate shall constitute,
on each Funding Date of a Swing Line Loan, the Administrative Bank's fully
absorbed cost of funds on such date plus the Applicable Euro-Rate Margin in
effect on the Funding Date of such Swing Line Loan.
1.81 "Offered Rate Period" means the time period from one (1) to seven
(7) consecutive calendar days for which the Administrative Bank offers an
Offered Rate for a Swing Line Loan under Section 3.1 hereof.
1.82 "Operating Lease/Rental Expense" means that portion of obligations
with respect to non-capital leases.
1.83 "Permitted Business Combination" means a Business Combination that
meets all of the requirements of Section 8.11 hereof.
1.84 "Person" means any individual, sole proprietorship, partnership,
joint venture, trust, unincorporated organization, association, corporation,
other entity or group, institution, party or government, whether federal, state,
county, city, municipal or other, or any agency or division thereof.
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1.85 "Potential Default" means the occurrence of any act or event which,
with the giving of notice and/or the passage of time, or both, would become an
Event of Default.
1.86 "Pricing Level" means, for any Pricing Period, Pricing Level I,
Pricing Level II, Pricing Level III, Pricing Level IV, or Pricing Level V, as
may be in effect for such Pricing Period; provided that, the Default Rate shall
be in effect upon the occurrence and during the continuation of any Event of
Default.
1.87 "Pricing Level I" means the Pricing Level that will be in effect
for the applicable Pricing Period if, as at the relevant Date of Determination,
the ratio of the Borrowers' Indebtedness as measured on such Date of
Determination, to the Borrowers' Cash Flow from Operations as measured on such
Date of Determination, is less than 1.50 to 1.0.
1.88 "Pricing Level II" means the Pricing Level that will be in effect
for the applicable Pricing Period if, as at the relevant Date of Determination,
the ratio of the Borrowers' Indebtedness as measured on such Date of
Determination, to the Borrowers' Cash Flow from Operations as measured on such
Date of Determination, is equal to or greater than 1.50 to 1.0, but is less than
2.0 to 1.0.
1.89 "Pricing Level III" means the Pricing Level that will be in effect
for the applicable Pricing Period if, as at the relevant Date of Determination,
the ratio of the Borrowers' Indebtedness as measured on such Date of
Determination, to the Borrowers' Cash Flow from Operations as measured on such
Date of Determination, is equal to or greater than 2.0 to 1.0, but is less than
2.50 to 1.0.
1.90 "Pricing Level IV" means the Pricing Level that will be in effect
for the applicable Pricing Period if, as of the relevant Date of Determination,
the ratio of the Borrowers' Indebtedness as measured on such Date of
Determination, to the Borrowers' Cash Flow from Operations as measured on such
Date of Determination, is equal to or greater than 2.50 to 1.0, but less than
3.0 to 1.0.
1.91 "Pricing Level V" means the Pricing Level that will be in effect
for the applicable Pricing Period if, as of the relevant Date of Determination,
the ratio of the Borrowers' Indebtedness as measured on such Date of
Determination, to the Borrowers' Cash Flow from Operations as measured on such
Date of Determination, is equal to or greater than 3.0 to 1.0.
1.92 "Pricing Level Calculation Date" means the date of the delivery to
the Banks of a Compliance Certificate in the form of Exhibit G hereto
demonstrating the appropriate Pricing Level, which delivery can occur on any
date from the prior Date of Determination to the date of delivery of the
Borrowers' financial statements for the particular month then ended required
pursuant to Section 7.3(ii) hereof.
1.93 "Pricing Period" means, with respect to any Date of Determination,
the period commencing on the day immediately after such Date of Determination
and ending on the next Date of Determination.
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1.94 "Prime Rate" means at any time the interest rate per annum most
recently designated or announced by the Administrative Bank as its "Prime Rate"
in effect at its principal office in Louisville, Kentucky, it being expressly
understood and agreed to by the Borrower that the "Prime Rate" is the rate of
interest designated by the Administrative Bank as its "Prime Rate" and such term
does not necessarily mean or imply that it is the lowest or best rate then
available from the Administrative Bank.
1.95 "Request for Revolving Credit Loan" means the Request in the form
of Exhibit E annexed hereto with respect to a proposed Revolving Credit Loan to
be delivered by the Borrowers to the Administrative Bank pursuant to Sections
▇.▇▇ and 6.2A hereof.
1.96 "Request for Swing Line Loan" means the Request in the form of
Exhibit F annexed hereto with respect to a proposed Swing Line Loan to be
delivered by the Borrowers to the Administrative Bank pursuant to Sections 3.l
and 6.2A hereof.
1.97 "Revolving Credit Facility" means the revolving line of credit
established by the Banks in favor of the Borrowers in the principal amount of
Sixty Five Million Dollars ($65,000,000) pursuant to which the Borrowers may
obtain Revolving Credit Loans from the Banks and/or Letters of Credit from PNC
during the term of the Revolving Credit Facility upon the terms and conditions
set forth in this Loan Agreement. The Revolving Credit Facility includes as a
sublimit the Letter of Credit Subfacility and the Swing Line Credit Facility.
All references to the "aggregate principal balance of the Revolving Credit Loans
outstanding" or similar phrases in this Loan Agreement or in the Revolving
Credit Notes shall mean, as of the date of determination thereof, the sum of (i)
the entire aggregate outstanding principal balance of all Revolving Credit Loans
made by the Banks pursuant to this Loan Agreement, (ii) the then existing Letter
of Credit Usage and (iii) the then existing Swing Line Usage.
.
1.98 "Revolving Credit Facility Commitment Fees" shall have the meaning
set forth in Section 2.3B hereof.
1.99 "Revolving Credit Facility Pro Rata Shares" means, with respect to
each Revolving Loan Commitment of each Bank, the percentage set forth opposite
that Bank's name on Schedule 2.1 annexed hereto; provided that Schedule 2.1
shall be amended and each Bank's Revolving Credit Facility Pro Rata Share shall
be adjusted from time to time to give effect to the addition or removal of any
Bank as provided herein or by assignment pursuant to Section 12 hereof.
1.100 "Revolving Credit Loans" means advances of principal of the
Revolving Credit Facility made pursuant to Section 2 hereof by the Banks to the
Borrowers from time to time pursuant to, and subject to the terms and conditions
set forth in, this Loan Agreement to support the working capital needs of the
Borrowers and for the other purposes described in Section 2.5A hereof.
1.101 "Revolving Credit Notes" means collectively (i) that certain
Revolving Credit Promissory Note dated of even date with this Loan Agreement,
made by the Borrowers, payable
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to the order of PNC, and in the face principal amount of Twenty Five Million
Dollars ($25,000,000), a form of which is annexed to this Loan Agreement as
Exhibit A-1, as the same may hereafter be amended, modified, renewed, replaced
and/or restated from time to time, (ii) that certain Revolving Credit Promissory
Note dated of even date with this Loan Agreement, made by the Borrowers, payable
to the order of National City, and in the face principal amount of Seventeen
Million Five Hundred Thousand Dollars ($17,500,000), a form of which is annexed
to this Loan Agreement as Exhibit A-2, as the same may hereafter be amended,
modified, renewed, replaced and/or restated from time to time, (iii) that
certain Revolving Credit Promissory Note dated of even date with this Loan
Agreement, made by the Borrowers, payable to the order of SunTrust, and in the
face principal amount of Twelve Million Five Hundred Thousand Dollars
($12,500,000), a form of which is annexed to this Loan Agreement as Exhibit A-3,
as the same may hereafter be amended, modified, renewed, replaced and/or
restated from time to time, (iv) that certain Revolving Credit Promissory Note
dated of even date with this Loan Agreement, made by the Borrowers, payable to
the order of Bank One and in the face principal amount of Ten Million Dollars
($10,000,000), a form of which is annexed to this Loan Agreement as Exhibit A-4,
as the same may hereafter be amended, modified, renewed, replaced and/or
restated from time to time, and (v) each future Revolving Credit Promissory
Note, if any, made by the Borrowers pursuant to the Revolving Credit Facility.
1.102 "Revolving Loan Commitments" means each Bank's commitment to
maintain or make Revolving Credit Loans and/or to issue Letters of Credit as set
forth in Section 2.1 hereof.
1.103 "Revolving Loan Commitment Termination Date" means the Revolving
Loan Commitment Termination Date then in effect, which shall be the earliest of
(i) December 31, 2001, subject to extension thereof as provided in Section 2.1B
hereof, (ii) the date as of which the Obligations shall have become immediately
due and payable pursuant to Section 9 of the Loan Agreement and (iii) the date
on which all of the Obligations are paid in full (including, without limitation,
the repayment, expiration, termination or cash collateralization of Letters of
Credit pursuant to this Loan Agreement) and the Revolving Loan Commitments are
reduced to zero.
1.104 "Security Agreement" means any of the Security Agreements dated as
of the date hereof entered into between the Administrative Bank and the
Borrowers, for the benefit of the Banks, as the same may hereafter be amended,
modified, renewed, replaced and/or restated from time to time, whether entered
into as of the Closing Date, or subsequent thereto.
1.105 "Stock Pledge Agreement" means that certain Stock Pledge Agreement
in the form of Exhibit J hereto, dated as of the date of this Agreement, between
Res-Care and the Administrative Bank, for the benefit of the Banks.
1.106 "Subsidiary" means, with respect to Res-Care, (i) any corporation
of which more than 50% of the outstanding Voting Stock is at the time owned by
Res-Care or by one or more of its Subsidiaries, and (ii) any Person controlled
by Res-Care or by one or more of its Subsidiaries, whether by virtue of voting
interest, other beneficial interest or by voting agreement, contract, proxy or
otherwise.
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1.107 "Swing Line Commitment Period" means the period from the Closing
Date through the Swing Line Commitment Termination Date.
1.108 "Swing Line Credit Facility" means the sums advanced or to be
advanced by the Administrative Bank as described in Section 3 hereof.
1.109 "Swing Line Loan" means advances of principal of the Swing Line
Credit Facility made by PNC to the Borrowers from time to time pursuant to, and
subject to the terms and conditions set forth in, this Loan Agreement for the
other purposes described in Section 3 hereof.
1.110 "Swing Line Note" means that certain Swing Line Promissory Note
dated of even date with this Loan Agreement, made by the Borrowers, payable to
the order of PNC, and in the face principal amount of Seven Million Five Hundred
Thousand ($7,500,000), a form of which is annexed to this Loan Agreement as
Exhibit B, as the same may hereafter be amended, modified, renewed, replaced
and/or restated from time to time.
1.111 "Swing Line Commitment Termination Date" shall mean the same date
as the Revolving Loan Commitment Termination Date.
1.112 "Swing Line Usage" means, as at any date of determination thereof,
the sum of the maximum aggregate principal amount of all outstanding Swing Line
Loans, which amount shall never exceed $7,500,000.
1.113 "Tax" or "Taxes" means any present or future tax, levy, impost,
duty, charge, governmental fee, deduction or withholding of any nature and
whatever called, by whomsoever, on whomsoever and wherever imposed, levied,
collected, withheld or assessed; provided that "Tax on the overall net income"
of a Person shall be construed as a reference to a tax imposed by the
jurisdiction in which that Person's principal office (and/or, in the case of any
Bank, its lending office) is located on all or part of the net income, profits
or gains of that Person (whether worldwide, or only insofar as such income,
profits or gains are considered to arise in or to relate to a particular
jurisdiction, or otherwise).
1.114 "Tax Transferee" means any Person who acquires any interest in the
Revolving Credit Loans (whether or not by operation of law) or the office to
which any Bank has transferred its Revolving Credit Loans for purposes of
determining where such Bank's Revolving Credit Loans are made, accounted for or
booked.
1.115 "Total Utilization of Revolving Loan Commitments" means, as at any
date of determination thereof, the sum of (i) the aggregate principal amount of
all outstanding Revolving Credit Loans, (ii) the Letter of Credit Usage and
(iii) the Swing Line Usage.
1.116 "Voting Stock" means the shares of capital stock or other
securities of the Borrowers entitled to vote generally in the election of the
directors of the Borrowers.
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1.117 Accounting Terms and Financial Information.
A. Accounting Terms. For purposes of this Loan Agreement, all
accounting terms not otherwise defined herein shall have the meanings assigned
to them in conformity with GAAP and all financial statements and certificates
and reports as to financial matters required to be delivered to the
Administrative Bank hereunder shall (unless otherwise disclosed to the
Administrative Bank in writing at the time of delivery thereof in the manner
described in paragraph B of this Section ) be prepared in accordance with GAAP
applied on a basis consistent with GAAP as applied in the preparation of the
latest financial statements furnished to the Administrative Bank hereunder.
B. Accounting Variances. Res-Care, for itself and the other
Borrowers, shall deliver to the Administrative Bank at the same time as the
delivery of any annual or quarterly financial statement under Section 7.3
hereof, (i) a description in reasonable detail of any variation between the
application of accounting principles employed in the preparation of such
statement and the application of accounting principles employed in the
preparation of the next preceding annual or quarterly financial statements
(which variation materially affects the presentation of the financial position
or results of operations of Res-Care and the other Borrowers on a consolidated
basis in accordance with GAAP) and (ii) reasonable estimates of the difference
between such statements arising as a consequence thereof.
1.118 Other Definitional Provisions. Any reference in this Loan
Agreement (i) to a Section , a Schedule or an Exhibit is a reference to a
section hereof, a schedule hereto or an exhibit hereto, respectively; and (ii)
to a subsection or a clause is, unless otherwise stated, a reference to a
subsection or a clause of the Section or subsection in which the reference
appears. In this Loan Agreement the singular includes the plural and the plural
the singular; "hereof," "herein," "hereto," "hereunder" and the like mean and
refer to this Loan Agreement as a whole and not merely to the specific section,
paragraph or clause in which the respective word appears; words importing any
gender include the other genders; references to statutes are to be construed as
including all statutory provisions consolidating, amending or replacing the
statute referred to; references to "writing" include printing, typing,
lithography and other means of reproducing words in a tangible visible form; the
words "including", "includes" and "include" shall be deemed to be followed by
the words "without limitation"; references to agreements and other contractual
instruments shall be deemed to include all subsequent amendments, supplements,
assignments and other modifications thereto, but only to the extent such
modifications are not prohibited by the terms of this Loan Agreement, and
references to Persons include their respective permitted successors and assigns
or, in the case of governmental Persons, Persons succeeding to the relevant
functions of such Persons.
SECTION 2
REVOLVING CREDIT FACILITY
Subject to the terms and conditions of this Loan Agreement, the Banks
hereby establish the Revolving Credit Facility in favor of the Borrowers in the
principal amount of Sixty Five
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Million Dollars ($65,000,000.00). Pursuant to the Revolving Credit Facility, the
Borrowers may obtain Revolving Credit Loans and/or Letters of Credit pursuant
to, and subject to the terms and conditions set forth in, this Loan Agreement
for the purposes set forth in Sections 2.5A and 2.7 hereof. The Revolving Credit
Facility is subject to the following terms and conditions:
2.1 Revolving Loan Commitments, Revolving Credit Loans.
A. Revolving Loan Commitments. Each Bank severally agrees,
subject to the limitations set forth below with respect to the maximum amount of
Revolving Credit Loans permitted to be outstanding from time to time, to lend to
the Borrowers from time to time during the period from the Closing Date to but
excluding the Revolving Loan Commitment Termination Date an aggregate amount not
exceeding its Revolving Credit Facility Pro Rata Share of the aggregate
Revolving Loan Commitments. The amount of each Bank's Revolving Loan Commitment
is set forth opposite its name on Schedule 2.1 annexed to this Loan Agreement
and the aggregate amount of the Revolving Loan Commitments is Sixty Five Million
Dollars ($65,000,000); provided, the amount of the Revolving Loan Commitments
shall be reduced from time to time by the amount of any reductions that are made
pursuant to Section 2.4C hereof (it being understood that all references to the
Revolving Loan Commitments of the Banks set forth in this Loan Agreement shall
mean the initial Revolving Loan Commitments of the Banks set forth on Schedule
2.1 annexed to this Loan Agreement as reduced by the voluntary reductions of the
Revolving Loan Commitments effected by the Borrowers pursuant to Section 2.4C of
the Loan Agreement). Each Bank's Revolving Loan Commitment shall expire on the
Revolving Loan Commitment Termination Date and all Revolving Credit Loans shall
be paid in full no later than that date. Amounts borrowed under this Section
▇.▇▇ may be repaid and reborrowed to but excluding the Revolving Loan Commitment
Termination Date, subject to the provisions of Section 2.4C hereof.
Anything contained in this Loan Agreement to the contrary
notwithstanding, the Revolving Credit Loans and the Revolving Loan Commitments
shall be subject to the following limitations:
(i) The Letter of Credit Subfacility is a sublimit under
the Revolving Credit Facility. The amount otherwise available for borrowing
under the Revolving Loan Commitments as of the time of determination thereof
(other than to reimburse PNC for the amount of any drawings under any Letters of
Credit honored by PNC and not theretofore reimbursed by the Borrowers) shall be
reduced by an amount equal to the Letter of Credit Usage as of such time of
determination;
(ii) The Swing Line Credit Facility is a sublimit under
the Revolving Credit Facility. The amount otherwise available for borrowing
under the Revolving Loan Commitments as of the time of determination thereof
shall be reduced by an amount equal to the Swing Line Usage;
(iii) The Total Utilization of Revolving Loan Commitments
shall not exceed the aggregate Revolving Loan Commitments; and
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(iv) At no time shall the Banks be required to make
Revolving Loans if the making of such Revolving Loans would cause the ratio of
Indebtedness to Cash Flow from Operations of the Borrowers to exceed 3.5 to 1.0.
B. Term of Revolving Loan Commitments. The Revolving Loan
Commitments shall become effective immediately as of the Closing Date, and as of
the Closing Date, the Borrowers may obtain Revolving Credit Loans and Letters of
Credit subject to the terms and conditions contained herein. The Revolving Loan
Commitments shall continue in effect until the Revolving Loan Commitment
Termination Date, unless sooner terminated (i) by the Banks upon the occurrence
and during the continuation of an Event of Default, or (ii) by the Borrowers at
any time in their sole and absolute discretion. The Borrowers may request, not
less than sixty (60) days prior to December 31, 1997 or not less than sixty (60)
days prior to any subsequent December 31, that the Revolving Loan Commitment
Termination Date be extended for a period of an additional twelve (12) months
beyond the then current Revolving Loan Commitment Termination Date. The Banks
shall notify the Borrowers in writing, within thirty (30) days after receipt of
such request, whether the Banks have elected to so extend the Revolving Loan
Commitment Termination Date. In the event the Banks fail to give such written
notice to the Borrowers within such thirty (30) day period, such failure shall
constitute an affirmative election by the Banks not to so extend the Revolving
Loan Commitment Termination Date. The Revolving Loan Commitment Termination Date
may only be extended by the unanimous written consent of all of the Banks in
their sole and absolute discretion. If any Bank elects not to extend the
Revolving Loan Commitment Termination Date, such Bank shall notify the Borrowers
and the other Banks thereof. In the event any Bank elects not to extend the
Revolving Loan Commitment Termination Date, the Revolving Loan Commitments shall
terminate, and the entire unpaid principal balance of and all accrued and unpaid
interest on the Revolving Credit Loans and all other Obligations shall be
respectively due and payable in full to the Banks on the then Revolving Loan
Commitment Termination Date, subject at all times to the Banks' absolute right
to terminate the Revolving Loan Commitments upon the occurrence and during the
continuation of an Event of Default. Upon termination of the Revolving Loan
Commitments by the Banks upon the occurrence and during the continuation of an
Event of Default, or by the Borrowers at any time in their sole and absolute
discretion, the entire unpaid principal balance of and all accrued and unpaid
interest on the Revolving Credit Loans and all other Obligations shall be
respectively due and payable in full to the Banks. The termination of the
Revolving Loan Commitments, for whatever reason, shall not in any way release or
relieve the Borrowers from their obligations incurred hereunder or in connection
herewith or under the Revolving Credit Notes, the Swing Line Note, the
Applications and Agreements For Letters of Credit, or the other Loan Instruments
and the provisions hereof and of the Revolving Credit Notes, the Swing Line
Note, the Applications and Agreements For Letters of Credit, and the other Loan
Instruments shall continue in full force and effect until the Revolving Credit
Notes, the Swing Line Note, the Applications and Agreements For Letters of
Credit, and all other Obligations have been respectively paid in full to the
Banks. In the event the Borrowers terminate the Revolving Loan Commitments,
which the Borrowers have the right to do at any time in their sole and absolute
discretion, the Borrowers shall be obligated to pay the Revolving Credit Notes,
the Swing Line Note, the Applications and Agreements For Letters of Credit, and
all other Obligations in full to the Banks, respectively.
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C. Borrowing Mechanics For Revolving Credit Loans Made to the
Borrowers. Revolving Credit Loans (except Swing Line Loans under the Swing Line
Credit Facility discussed in Section 3 hereof) made to the Borrowers on any
Funding Date shall be in an aggregate minimum amount of (i) Two Hundred Fifty
Thousand Dollars ($250,000.00) and integral multiples of Fifty Thousand Dollars
($50,000.00) in excess of that amount in the case of Base Rate Loans, and (ii)
Five Hundred Thousand Dollars ($500,000.00) and integral multiples of One
Hundred Thousand Dollars ($100,000.00) in excess of that amount in the case of
Euro-Rate Loans. Whenever the Borrowers desire that the Banks make a Revolving
Credit Loan to the Borrowers, the Borrowers shall deliver to the Administrative
Bank a Request For Revolving Credit Loan no later than 11:00 A.M. (Louisville,
Kentucky time) at least three (3) Business Days in advance of the proposed
Funding Date in the case of a Euro-Rate Loan and on the proposed Funding Date in
the case of a Base Rate Loan. The Request For Revolving Credit Loan shall be in
the form of Exhibit E annexed hereto and shall specify (i) the proposed Funding
Date, (ii) the amount of the Revolving Credit Loan, (iii) whether the Revolving
Credit Loan shall be a Base Rate Loan or a Euro-Rate Loan, (iv) in the case of
any Revolving Credit Loan requested to be made as a Euro-Rate Loan, the initial
Interest Period applicable thereto, (v) that the amount of the proposed
Revolving Credit Loan will not cause the Total Utilization of Revolving Loan
Commitments to exceed the aggregate Revolving Loan Commitments and (vi) that the
amount of the proposed Revolving Credit Loan will not cause the ratio of the
Borrowers' Indebtedness to Cash Flow from Operations to exceed 3.5 to 1.0.
Revolving Credit Loans made to the Borrowers may be continued as or converted
into Base Rate Loans or Euro-Rate Loans in the manner provided in Section 2.2D
hereof. In lieu of delivering the above described Request For Revolving Credit
Loan, the Borrowers may give the Administrative Bank telephonic notice by the
required time of the requested Revolving Credit Loan under this Section ▇.▇▇;
provided that such notice shall be promptly confirmed in writing by delivery of
a Request For Revolving Credit Loan to the Administrative Bank on or before the
applicable Funding Date.
No Bank shall incur any liability to the Borrowers in acting upon any
telephonic notice referred to above which the Administrative Bank believes in
good faith to have been given by a duly Authorized Officer or other Person
authorized to borrow on behalf of the Borrowers or for otherwise acting in good
faith under this Section ▇.▇▇ and, upon funding of any Revolving Credit Loan by
the Banks in accordance with this Loan Agreement pursuant to any telephonic
notice, the Borrowers shall have effected such Revolving Credit Loan hereunder.
Except as provided in Sections 2.6B, 2.6C and 2.6G hereof, a Request For
Revolving Credit Loan for a Euro-Rate Loan (or telephonic notice in lieu
thereof) shall be irrevocable on and after the related Interest Rate
Determination Date, and the Borrowers shall be bound to obtain the Euro-Rate
Loan in accordance therewith.
D. Disbursement of Revolving Credit Loans to the Borrowers. All
Revolving Credit Loans made to the Borrowers under this Loan Agreement shall be
made by the Banks simultaneously and proportionately in accordance with their
respective Revolving Credit Facility Pro Rata Shares, it being understood that
no Bank shall be responsible for any default by the other Bank in funding its
Revolving Credit Facility Pro Rata Share of a Revolving Credit Loan requested
hereunder by the Borrowers, nor shall the Revolving Loan Commitment of any Bank
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22
be increased or decreased as a result of the default by the other Bank in
funding its Revolving Credit Facility Pro Rata Share of a Revolving Credit Loan
requested hereunder by the Borrowers. Each Bank shall make its Revolving Credit
Facility Pro Rata Share of each Revolving Credit Loan to be made to the
Borrowers available to the Administrative Bank, in same day funds, at the office
of the Administrative Bank located at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ not later than 1:00 P.M. (Louisville, Kentucky time) on the Funding
Date. Except with respect to the reimbursement to PNC for a drawing under a
Letter of Credit issued by PNC as provided in Section 2.7 hereof, upon
satisfaction or waiver of the conditions precedent specified in Section 5.1 in
the case of the initial Revolving Credit Loan on the initial Funding Date and
Section 5.2 in the case of a Revolving Credit Loan on any subsequent Funding
Date, the Administrative Bank shall make the proceeds of each Revolving Credit
Loan requested by the Borrowers available to the Borrowers on the Funding Date
by causing an amount of same day funds equal to the proceeds of the Banks'
respective Revolving Credit Facility Pro Rata Shares of such Revolving Credit
Loan received by the Administrative Bank at its office located at the address
set forth in the preceding sentence to be credited to the Borrowers' Loan
Account maintained at such office of the Administrative Bank or wired to an
account designated by the Borrowers. All Revolving Credit Loans shall be
respectively paid in full to the Banks on the Revolving Loan Commitment
Termination Date.
Nothing in this Section 2.1D shall be deemed to relieve any Bank from
its obligation to fulfill its Revolving Loan Commitment hereunder or to
prejudice any rights that the Borrowers may have against any Bank as a result of
any default by such Bank hereunder.
E. Records. Each Bank shall record the Revolving Credit Loans
made to the Borrowers from time to time and each repayment or prepayment in
respect of the principal amount of such Revolving Credit Loans in the Bank's
electronic records. Any such recordation in accordance with the terms of this
Loan Agreement shall be conclusive and binding on the Borrowers absent manifest
error; provided, the failure to make any such recordation, or any error in such
recordation, shall not affect the Borrowers' obligation to repay all Revolving
Credit Loans to the Banks in accordance with this Loan Agreement and the
Revolving Credit Notes.
F. Borrowers' Loan Accounts.
(i) Each Bank shall enter all Revolving Credit Loans made
to the Borrowers as debits in the Borrowers' Loan Account maintained with such
Bank. Each Bank shall also record in the Borrowers' Loan Account maintained with
such Bank in accordance with customary accounting practice all other charges,
expenses and other items properly chargeable to the Borrowers; all payments made
by the Borrowers on account of the Revolving Credit Loans made by such Bank; and
other appropriate debits and credits. The debit balance of the Borrowers' Loan
Account maintained with such Bank shall reflect the unpaid principal balance of
the Revolving Credit Loans from time to time maintained with such Bank. At least
once each month the Administrative Bank shall render a statement of account for
the Borrowers' Loan Accounts maintained with PNC and the other Banks, which
statement shall be considered correct and accepted by the Borrowers and
conclusively binding upon the Borrowers in the absence of
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23
manifest error unless the Borrowers notify the Administrative Bank to the
contrary within thirty (30) days from the receipt of said statement by the
Borrowers.
(ii) Any and all principal, interest, charges and expenses,
attorneys' fees and taxes now or hereafter due and owing under the Revolving
Credit Notes and any of the other Loan Instruments may be charged to any deposit
account of the Borrowers with a Bank or to the Borrowers' Loan Account
maintained with such Bank.
2.2 Interest on the Revolving Credit Loans.
A. Rates of Interest. Subject to the provisions of Sections 2.2E
and 4 hereof, each Revolving Credit Loan shall bear interest on the unpaid
principal amount thereof from the date made through maturity (whether by
acceleration or otherwise) at the Base Rate plus the Applicable Base Rate Margin
or the Euro-Rate plus the Applicable Euro-Rate Margin, as the case may be. The
applicable rate of interest with respect to Revolving Credit Loans shall be
selected by the Borrowers initially at the time a Request For Revolving Credit
Loan is delivered to the Administrative Bank pursuant to Section 2.1C hereof.
The interest rate with respect to any Revolving Credit Loan may be changed by
the Borrowers from time to time pursuant to Section 2.2D hereof. If on any day a
Revolving Credit Loan is outstanding with respect to which notice has not been
delivered to the Administrative Bank or the Banks in accordance with the terms
of this Loan Agreement specifying the applicable interest rate, then, for that
day, that Revolving Credit Loan shall bear interest at the Base Rate plus the
Applicable Base Rate Margin.
Subject to the provisions of Sections 2.2E and 4 hereof, Revolving
Credit Loans shall bear interest through maturity as follows:
(i) if a Base Rate Loan, at a rate equal to the higher of
(a) the Federal Funds Effective Rate plus one half percent (0.5%) per annum plus
the Applicable Base Rate Margin or (b) the Prime Rate plus the Applicable Base
Rate Margin; provided that, on each Date of Determination, commencing with the
first Date of Determination to occur after the Closing Date, the Applicable Base
Rate Margin in effect for the Pricing Period commencing on such Date of
Determination and continuing for the term of the Pricing Period that begins on
such Date of Determination shall be the Applicable Base Rate Margin
corresponding to the Pricing Level in effect for such Pricing Period, as
follows:
Pricing Level Applicable Base Rate Margin
------------- ---------------------------
Level I 0.00%
Level II 0.00%
Level III 0.00%
Level IV 0.00%
Level V 0.25%
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24
(ii) if a Euro-Rate Loan, at a rate per annum equal to the
sum of the Euro-Rate plus the Applicable Euro-Rate Margin; provided that, on
each Date of Determination, commencing with the first Date of Determination to
occur after the Closing Date, the Applicable Euro-Rate Margin in effect for the
Pricing Period commencing on such Date of Determination and continuing for the
term of the Pricing Period that begins on such Date of Determination shall be
the Applicable Euro-Rate Margin corresponding to the Pricing Level in effect for
such Pricing Period, as follows:
Pricing Level Applicable Euro-Rate Margin
------------- ---------------------------
Level I 0.75%
Level II 1.00%
Level III 1.25%
Level IV 1.50%
Level V 1.75%
(iii) Notwithstanding that the Pricing Level Calculation
Date of the applicable Pricing Level for a Pricing Period occurs after the
relevant Date of Determination, upon the actual calculation of the applicable
Pricing Level for such Pricing Period, adjustments to the amount of accrued
interest on the Base Rate Loans and/or Euro-Rate Loans, as applicable, shall be
made to reflect retroactive application of the applicable Pricing Level to the
first day of such Pricing Period.
Notwithstanding anything in the foregoing to the
contrary, if any Compliance Certificate delivered by the Borrowers demonstrating
the appropriate Pricing Level shall prove to be incorrect (as determined by
reference to a subsequent Compliance Certificate or subsequent publicly filed
financial statements of the Borrowers or otherwise), such Compliance Certificate
shall no longer be in effect, and the Administrative Bank shall notify the
Borrowers of such incorrectness and shall calculate the difference between the
amount of interest actually paid by the Borrowers on the Base Rate Loans and the
Euro-Rate Loans on the basis of such incorrect Compliance Certificate and the
amount of interest which would have been due on the Base Rate Loans and the
Euro-Rate Loans had such incorrect Compliance Certificate not been delivered.
The Administrative Bank shall notify the Borrowers of the amount of such
difference, if any, in a statement setting forth the method of calculation of
such amount (which calculation, in the absence of demonstrable error, shall be
deemed correct) and the Borrowers shall pay such amount to the Administrative
Bank for the benefit of the Banks within three (3) Business Days of such notice.
B. Interest Periods. In connection with each Euro-Rate Loan, the
Borrowers may, pursuant to the applicable Request For Revolving Credit Loan,
select the Interest Period to be applicable to such Euro-Rate Loan, which
Interest Period shall be at the Borrowers' option either a one, two, three or
six month period. The following provisions are applicable to Interest Periods
generally:
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(i) the initial Interest Period for any Euro-Rate Loan
shall commence on the Funding Date of such Euro-Rate Loan, in the case of a
Revolving Credit Loan initially made as a Euro-Rate Loan, or on the date
specified in the applicable Notice of Conversion/Continuation, in the case of a
Revolving Credit Loan converted to a Euro-Rate Loan;
(ii) in the case of immediately successive Interest
Periods applicable to a Euro-Rate Loan continued as such pursuant to Notice of
Conversion/Continuation, each successive Interest Period shall commence on the
day on which the next preceding Interest Period expires;
(iii) if an Interest Period would otherwise expire on a
day that is not a Business Day, such Interest Period shall expire on the next
succeeding Business Day; provided that, if any Interest Period would otherwise
expire on a day that is not a Business Day but is a day of the month after which
no further Business Day occurs in such month, such Interest Period shall expire
on the next preceding Business Day;
(iv) any Interest Period of a Euro-Rate Loan that begins
on the last Business Day of a calendar month (or on a day for which there is no
numerically corresponding day in the calendar month at the end of such Interest
Period) shall, subject to clause (iii) of this Section 2.2B, end on the last
Business Day of a calendar month;
(v) in the event the Borrowers fail to specify an Interest
Period with respect to a Euro-Rate Loan in the applicable Request For Revolving
Credit Loan or Notice of Conversion/Continuation, the Borrowers shall be deemed
to have selected an Interest Period of one month; and
(vi) no Interest Period shall extend beyond the Revolving
Loan Commitment Termination Date.
C. Interest Payments. Subject to the provisions of Section 2.2E
hereof, interest shall be payable on the Revolving Credit Loans as follows:
(i) interest on each Base Rate Loan shall be payable in
arrears on and to the last day of each calendar quarter, upon any prepayment or
repayment of such Base Rate Loan (to the extent accrued on the amount being
prepaid or repaid) and at maturity (including final maturity); and
(ii) interest on each Euro-Rate Loan shall be payable in
arrears on and to the ninetieth (90th) day during each Interest Period
applicable to that Euro-Rate Loan, the last day of each Interest Period
applicable to that Euro-Rate Loan, and upon any prepayment or repayment of that
Euro-Rate Loan (to the extent accrued on the amount being prepaid or repaid) and
at maturity (including final maturity).
D. Conversion or Continuation. Subject to the provisions of
Section 2.6 hereof, the Borrowers shall have the option (i) to convert at any
time all or any part of
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26
outstanding Revolving Credit Loans from Revolving Credit Loans bearing interest
as Base Rate Loans to Revolving Credit Loans bearing interest as Euro-Rate
Loans, and (ii) upon the expiration of any Interest Period applicable to a
Euro-Rate Loan, to continue all or any portion of such Revolving Credit Loan as
a Euro-Rate Loan, and the succeeding Interest Period of such continued Euro-Rate
Loan shall commence on the most recent Interest Payment Date thereof; provided
however that a Euro-Rate Loan may only be converted into a Revolving Credit Loan
bearing interest as a Base Rate Loan on the expiration date of the Interest
Period applicable thereto.
The Borrowers shall deliver a Notice of Conversion/Continuation to the
Administrative Bank no later than 11:00 A.M. (Louisville, Kentucky time) at
least three (3) Business Days in advance of the proposed conversion/continuation
date. A Notice of Conversion/ Continuation shall specify (i) the proposed
conversion/continuation date (which shall be a Business Day), (ii) the amount of
the Revolving Credit Loan to be converted/continued, (iii) the nature of the
proposed conversion/continuation, (iv) in the case of a conversion to, or
continuation of, a Euro-Rate Loan, the requested Interest Period, and (v) in the
case of a conversion to, or a continuation of, a Euro-Rate Loan or a Base Rate
Loan, that no Event of Default has occurred and is continuing. In lieu of
delivering the above-described Notice of Conversion/Continuation, the Borrowers
may give the Administrative Bank telephonic notice by the required time of any
proposed conversion/continuation under this section 2.2D; provided that such
notice shall be promptly confirmed in writing by delivery of a Notice of
Conversion/Continuation to the Administrative Bank on or before the proposed
conversion/continuation date.
The Banks shall not incur any liability to the Borrowers in acting upon
any telephonic notice referred to above that the Administrative Bank believes in
good faith to have been given by a duly Authorized Officer or other Person
authorized to act on behalf of the Borrowers or for otherwise acting in good
faith under this Section 2.2D, and upon conversion or continuation of the
applicable basis for determining the interest rate with respect to any Revolving
Credit Loans in accordance with this Loan Agreement pursuant to any such
telephonic notice, the Borrowers shall have effected a conversion or
continuation, as the case may be, hereunder.
Except as otherwise provided in Sections 2.6B, 2.6C and 2.6G hereof, a
Notice of Conversion/Continuation for conversion to, or continuation of, a
Euro-Rate Loan (or telephonic notice in lieu thereof) shall be irrevocable on
and after the related Interest Rate Determination Date and the Borrowers shall
be bound to effect a conversion or continuation in accordance therewith.
E. Post-Maturity Interest. Any principal payments on the
Revolving Credit Loans not paid when due and, to the extent permitted by
applicable law, any interest payments on the Revolving Credit Loans or any fees
or other amounts owed by the Borrowers hereunder not paid when due, in each case
whether at stated maturity, by notice of prepayment, by acceleration or
otherwise, shall thereafter bear interest (including post-petition interest in
any proceeding under the Bankruptcy Code or other applicable bankruptcy laws)
payable on demand at a rate equal to the Default Rate. Payment or acceptance of
the increased rates of interest provided for in this Section 2.2E is not a
permitted alternative to timely payment and shall not
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constitute a waiver of any Event of Default or otherwise prejudice or limit any
rights or remedies of the Banks.
F. Computation of Interest. Interest on the Euro-Rate Loans shall
be computed on the basis of a 360-day year, and interest on the Base Rate Loans
shall be computed on the basis of an actual 365 or 366-day year, as applicable,
in each case for the actual number of days elapsed in the period during which it
accrues. In computing interest on any Revolving Credit Loan, the date of the
making of such Revolving Credit Loan or the first day of an Interest Period
applicable to such Revolving Credit Loan, as the case may be, shall be included,
and the date of payment of such Revolving Credit Loan or the expiration date of
an Interest Period applicable to such Revolving Credit Loan or, with respect to
a Revolving Credit Loan being converted to a Euro-Rate Loan or Base Rate Loan,
the date of conversion of such Revolving Credit Loan to such Euro-Rate Loan or
Base Rate Loan shall be excluded; provided that if a Revolving Credit Loan is
repaid on the same day on which it is made, one day's interest shall be paid on
that Revolving Credit Loan.
G. Limitation on Euro-Rate Loan Tranches. At no time shall the
number of Euro-Rate Loans outstanding at any time outstanding exceed seven (7).
2.3 Fees.
A. Closing Fees and Expenses. The Borrowers agree to pay to the
Administrative Bank on the Closing Date, for the benefit of the Banks, Closing
Fees in the total amount set forth in Section III of Schedule 2.3A hereto. Upon
receipt of such moneys, the Administrative Bank shall remit the Closing Fees set
forth in Sections I and II of Schedule 2.3A to the Banks. The Borrowers shall
have no liability to any Bank for any Closing Fees paid to the Administrative
Bank which the Administrative Bank does not properly remit to such Bank pursuant
to Sections I and II of Schedule 2.3A, and such Bank's sole remedy in respect
thereof shall be against the Administrative Bank. Pursuant to this Section 2.3A
and Section 15.10 hereof, the Borrowers also agree to pay to the Administrative
Bank on the Closing Date the reasonable fees and expenses of the Administrative
Bank's counsel in negotiating, drafting and closing this Loan Agreement and
related documents.
B. Commitment Fee.
(i) The Borrowers agree to pay to the Administrative Bank,
for the benefit of the Banks in proportion to their respective Revolving Credit
Facility Pro Rata Shares, commitment fees (the "Revolving Credit Facility
Commitment Fees") for the period from and including the Closing Date to and
excluding the Revolving Loan Commitment Termination Date, equal to the average
of the daily excess of the Revolving Loan Commitments (as they may be reduced
pursuant to Section 2.4C hereof) over the aggregate outstanding principal amount
of Revolving Credit Loans and the Letter of Credit Usage multiplied by the
Applicable Commitment Fee Percentage set forth below; provided that, on each
Date of Determination, commencing with the first Date of Determination to occur
after the Closing Date, the Applicable Commitment Fee Percentage in effect for
the Pricing Period commencing on such Date of
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28
Determination and continuing for the term of the Pricing Period that begins on
such Date of Determination shall be the Applicable Commitment Fee Percentage
corresponding to the Pricing Level in effect for such Pricing Period, as
follows:
Pricing Level Applicable Commitment Fee Percentage
------------- ------------------------------------
Level I 0.25%
Level II 0.25%
Level III 0.30%
Level IV 0.30%
Level V 0.30%
Provided, further, that, in the case of PNC only, the calculation of the
Revolving Credit Facility Commitment Fee shall be adjusted to add the aggregate
outstanding principal amount of Swing Line Loans to the aggregate outstanding
principal amount of Revolving Credit Loans and the Letter of Credit Usage
allocable to PNC, before the calculation of the Revolving Credit Facility
Commitment Fee payable to PNC is performed.
The Revolving Credit Facility Commitment Fees shall be calculated on the basis
of a 360-day year and the actual number of days elapsed and shall be payable
quarterly in arrears on the last day of each Fiscal Quarter, commencing on the
first such date to occur after the Closing Date, and on the Revolving Loan
Commitment Termination Date. The Borrowers shall have no liability to the Banks
for any Revolving Credit Facility Commitment Fees paid to the Administrative
Bank which the Administrative Bank does not properly remit to such Bank, and
such Bank's sole remedy in respect thereof shall be against the Administrative
Bank.
(ii) Notwithstanding that the Pricing Level Calculation
Date of the Applicable Pricing Level for a Pricing Period occurs after the
relevant Date of Determination, upon the actual calculation of the applicable
Pricing Level for such Pricing Period, adjustments to the Applicable Commitment
Fee Percentage and the amount of the Revolving Credit Facility Commitment Fees,
as applicable, shall be made to reflect retroactive application of the
applicable Pricing Level to the first day of such Pricing Period.
Notwithstanding anything in the foregoing to the contrary, if any Compliance
Certificate delivered by the Borrowers demonstrating the appropriate Pricing
Level shall prove to be incorrect (as determined by reference to a subsequent
Compliance Certificate or subsequent publicly filed financial statements of the
Borrowers or otherwise), such Compliance Certificate shall no longer be in
effect, and the Administrative Bank shall notify the Borrowers of such
incorrectness and shall calculate the difference between the amount of the
Revolving Credit Facility Commitment Fees actually paid by the Borrowers on the
basis of such incorrect Compliance Certificate and the amount of Revolving
Credit Facility Commitment Fees which would have been due had such incorrect
Compliance Certificate not been delivered. The Administrative Bank shall notify
the Borrowers of the amount of such difference, if any, in a statement setting
forth the method of calculation of such amount (which calculation, in the
absence of demonstrable error, shall be deemed
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29
correct) and the Borrowers shall pay such amount to the Administrative Bank for
the benefit of the Banks within three (3) Business Days of such notice.
C. Other Fees. The Borrowers agree to pay to the Administrative
Bank such fees for serving as the Administrative Bank hereunder in the amounts
and at the times agreed to in writing between the Borrowers and the
Administrative Bank.
2.4 Prepayments and Payments; Reductions in Revolving Loan Commitments.
A. Voluntary Prepayments. The Borrowers may, upon not less than
one (1) Business Day prior written or telephonic notice confirmed in writing to
the Administrative Bank, at any time and from time to time, prepay any Revolving
Credit Loans (other than Swing Line Loans) in whole or in part in an aggregate
minimum amount of One Hundred Thousand Dollars ($100,000.00) and integral
multiples of Twenty Five Thousand Dollars ($25,000.00) in excess of that amount;
provided however that in the event that the Borrowers prepay a Euro-Rate Loan
pursuant to this Section 2.4B on a date that is other than the expiration date
of the Interest Period applicable thereto, the Borrowers shall compensate the
Banks in accordance with the provisions of Section 2.6D hereof. If the Borrowers
have given notice of prepayment as afore-said, the principal amount of the
Revolving Credit Loans specified in such notice shall become due and payable on
the prepayment date specified therein. All prepayments of principal of the
Revolving Credit Loans shall be accompanied by the payment of accrued interest
on the principal amount being prepaid and shall be applied to the payment of
interest before application to principal. All prepayments of the Revolving
Credit Loans shall be applied first to Base Rate Loans to the full extent
thereof and then shall be applied to Euro-Rate Loans, in each case in a manner
which minimizes the amount of any payments required to be made by the Borrowers
pursuant to Section 2.6D hereof.
B. General Provisions Regarding Payments.
(i) Manner and Time of Payment. All payments of principal,
interest and fees hereunder and under the Revolving Credit Notes by the
Borrowers shall be made without defense, setoff and counterclaim and in same day
funds and delivered to the Administrative Bank not later than 11:00 A.M.
(Louisville, Kentucky time) on the date due at its office located in Louisville,
Kentucky; funds received by the Administrative Bank after that time shall be
deemed to have been paid by the Borrowers on the next succeeding Business Day.
(ii) Payments on Business Days. Whenever any payment to be
made hereunder or under the Revolving Credit Notes shall be stated to be due on
a day that is not a Business Day, such payment shall be made on the next
succeeding Business Day (unless no further Business Day occurs in such month, in
which case payment shall be made on the next preceding Business Day) and such
extension of time shall be included in the computation of the payment of
interest hereunder or under the Revolving Credit Notes or of the Revolving
Credit Facility Commitment Fees, as the case may be.
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30
C. Voluntary Reduction of Revolving Loan Commitments. The
Borrowers shall have the right, at any time and from time to time, to terminate
in whole or permanently reduce in part, without premium or penalty, the
Revolving Loan Commitments. The Borrowers shall give not less than five (5)
Business Days' prior written notice to the Administrative Bank designating the
date (which shall be a Business Day) of such termination or reduction and the
amount of any partial reduction of the Revolving Loan Commitments. Such
termination or partial reduction of the Revolving Loan Commitments shall be
effective on the date specified in the Borrowers' notice and shall reduce the
Revolving Loan Commitment of each Bank in proportion to its Revolving Credit
Facility Pro Rata Share. Any such partial reduction of the Revolving Loan
Commitments shall be in a minimum amount of One Million Dollars ($1,000,000.00)
and integral multiples of One Hundred Thousand Dollars ($100,000.00) in excess
of that amount.
2.5 Use of Proceeds.
A. Revolving Credit Loans. The proceeds of the Revolving Credit
Loans shall be used by the Borrowers to fund their working capital needs, to pay
off an existing term loan and to fund the purchase price of acquisitions of and
investments in businesses which are described in Section 8.5 hereof and all
businesses incidental to or related to the foregoing businesses of the Borrowers
therein described.
B. Margin Regulations. No portion of the proceeds of any
Revolving Credit Loans under this Loan Agreement shall be used by the Borrowers
in any manner which might cause the making of the Revolving Credit Loans or the
application of the proceeds thereof to violate Regulation G, Regulation U,
Regulation T, or Regulation X of the Board of Governors of the Federal Reserve
System or any other regulation of such Board or to violate the securities and
Exchange Act of 1934, in each case as in effect on the date or dates of the
making of any such Revolving Credit Loan and such use of the proceeds thereof.
If requested by the Banks, the Borrowers shall execute and deliver to the Banks
a completed Federal Reserve Form U-1.
2.6 Special Provisions Governing Euro-Rate Loans. Notwithstanding any
other provision of this Loan Agreement to the contrary, the following provisions
shall govern with respect to Euro-Rate Loans as to the matters covered:
A. Determination of Euro-Rate. As soon as practicable after 10:00
A.M. Louisville, Kentucky time on each Interest Rate Determination Date
applicable to the particular Euro-Rate Loan, the Administrative Bank shall
furnish to the Borrowers a quote of the Euro-Rate to apply to the particular
Euro-Rate Loan. The Administrative Bank will in addition confirm to the
Borrowers in writing the actual Euro-Rate prior to the funding of the particular
Euro-Rate Loan, and the determination of each Euro-Rate by the Administrative
Bank, provided that the Administrative Bank shall have determined the Euro-Rate
in good faith, shall be final, conclusive and binding upon both the Borrowers
and the Banks in the absence of manifest or demonstrable error and shall apply
to the particular Euro-Rate Loan for the applicable Interest Period.
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31
B. Inability to Determine Euro-Rate. In the event that the
Administrative Bank shall have determined in good faith (which determination
shall be final and conclusive and binding upon the Borrowers), on any Interest
Rate Determination Date or Funding Date with respect to any Euro-Rate Loans,
that by reason of circumstances occurring after the date of this Loan Agreement
affecting the London interbank market, adequate and fair means do not exist for
ascertaining the interest rate applicable to such Euro-Rate Loans on the basis
provided for in the definition of Euro-Rate, the Administrative Bank shall on
such date give notice (by telecopy or by telephone confirmed in writing) to the
Borrowers and the Banks of such determination, whereupon (i) no Revolving Credit
Loans may be made as, or converted to, Euro-Rate Loans until such time as the
Administrative Bank notifies the Borrowers and the Banks that the circumstances
giving rise to such notice no longer exist; (ii) any Request for Revolving
Credit Loan or Notice of Conversion/Continuation given by the Borrowers with
respect to the Revolving Credit Loans in respect of which such determination was
made shall be deemed to be rescinded by the Borrowers, and (iii) any Request for
Revolving Credit Loan or Notice of Conversion/Continuation given by the
Borrowers with respect to the Revolving Credit Loans in respect of which such
determination was made shall be deemed to be a request to make Base Rate Loans.
C. Illegality or Impracticability of Euro-Rate Loans. In the
event that on any date any Bank shall have determined in good faith (which
determination shall be final and conclusive and binding upon the parties hereto
but shall be made only after consultation with the Borrowers) that the making,
maintaining or continuation of its Euro-Rate Loans (i) has become unlawful as a
result of compliance by such Bank in good faith with any law, treaty,
governmental rule, regulation, guideline or order (or would conflict with any
such treaty, governmental rule, regulation, guideline or order not having the
force of law even though the failure to comply therewith would not be unlawful)
or (ii) has become impracticable, or would cause such Bank material hardship, as
a result of contingencies occurring after the date of this Loan Agreement which
materially and adversely affect the London interbank market or the position of
such Bank in that market, then such Bank shall on that day give notice (by
telecopy or by telephone confirmed in writing) to the Borrowers and the other
Bank of such determination. Thereafter, (a) the obligation of the Banks to make
Revolving Credit Loans as, or to convert Revolving Credit Loans to, Euro-Rate
Loans shall be suspended until such notice shall be withdrawn by the particular
Bank, (b) to the extent such determination by the particular Bank relates to a
Euro-Rate Loan then being requested by the Borrowers pursuant to a Request for
Revolving Credit Loan or Notice of Conversion/Continuation, the Banks shall make
such Euro-Rate Loan as (or convert such Euro-Rate Loan to, as the case may be) a
Base Rate Loan, and (c) the Banks' obligation to maintain their outstanding
Euro-Rate Loans, as the case may be (the "Affected Loans"), shall be terminated
at the earlier to occur of the expiration of the Interest Periods then in effect
with respect to the Affected Loans or when required by law, and the Affected
Loans shall automatically convert into Base Rate Loans on the date of such
termination.
D. Compensation For Breakage or Non-Commencement of Interest
Periods. The Borrowers shall compensate the Banks, upon written request by the
Banks (which request shall set forth the basis for requesting such amounts), for
all reasonable losses, expenses and
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liabilities (including, without limitation, any interest paid by the Banks to
lenders of funds borrowed by them to make or carry the Euro-Rate Loans and any
reasonable loss, expense or liability sustained by the Banks in connection with
the liquidation or re-employment of such funds) which the Banks may sustain: (i)
if for any reason (other than a default by the Banks or the conversion of the
Borrowers' Request for Revolving Credit Loan or Notice of Conversion/
Continuation from a request to make Euro-Rate Loans into a request to make Base
Rate Loans pursuant to Sections 2.6B or 2.6C hereof) a borrowing of any
Euro-Rate Loan does not occur on a date specified therefor in a Request for
Revolving Credit Loan or Notice of Conversion/Continuation or a telephonic
request for borrowing, or a conversion to or continuation of any Euro-Rate Loan
does not occur on a date specified therefor in a Request for Revolving Credit
Loan or Notice of Conversion/Continuation or a telephonic request for conversion
or continuation, (ii) if any prepayment or conversion of any of the Euro-Rate
Loans occurs on a date that is not the last day of the Interest Period
applicable to that Euro-Rate Loan, (iii) if any prepayment of any of the
Euro-Rate Loans is not made on any date specified in a notice of prepayment
given by the Borrowers, or (iv) as a consequence of any other default by the
Borrowers to repay the Euro-Rate Loans when required by the terms of this Loan
Agreement. The Banks shall deliver to the Borrowers a certificate setting forth
the calculation of the compensation claimed to be due to the Banks within thirty
(30) days after the occurrence of the event giving rise to such claim for
compensation, which calculations shall be binding upon the Borrowers in the
absence of manifest or demonstrable error.
E. Booking of Euro-Rate Loans. Each Bank may make, carry or
transfer its Revolving Credit Facility Pro Rata Share of Euro-Rate Loans at, to,
or for the account of any of its branch offices or the office of an Affiliate of
such Bank; provided however that if any transfer of a Bank's Revolving Credit
Pro Rata Share of Euro-Rate Loans from the office where such Bank's Revolving
Credit Facility Pro Rata Share of Euro-Rate Loans originated shall materially
and unreasonably increase the cost to the Borrowers of such Euro-Rate Loans,
such transfer may occur only if required (i) by the introduction of or any
change (including, without limitation, any change by way of imposition or
increase of reserve requirements) in or in the interpretation of any law or
regulation, or (ii) to comply with any guideline or request from any central
bank or other governmental authority or quasi-governmental authority exercising
control over banks or financial institutions generally (whether or not such
guideline or request shall have the force of law).
F. Assumptions Concerning Funding of Euro-Rate Loans. The
calculation of all amounts payable to the Banks under this Section 2.6 and under
Section 4.1 hereof shall be made as though each Bank had actually funded each
Euro-Rate Loan through the purchase of a deposit bearing interest at the rate
obtained pursuant to clause (i) of the definition of Euro-Rate in an amount
equal to such Bank's Revolving Credit Facility Pro Rata Share of the amount of
such Euro-Rate Loan and having a maturity comparable to the relevant Interest
Period and through the transfer of such deposit from an offshore office of such
Bank to a domestic office of such Bank in the United States of America; provided
however that each Bank may fund its Revolving Credit Facility Pro Rata Share of
the Euro-Rate Loans in any manner it sees fit and the foregoing assumptions
shall be utilized only for the purposes of calculating amounts payable under
this Section 2.6 and under Section 4.1 hereof.
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G. Euro-Rate Loans After Event of Default. After the occurrence
and during the continuation of an Event of Default, (i) the Borrowers may not
elect to have a Revolving Credit Loan made or maintained as, or converted to, a
Euro-Rate Loan after the expiration of any Interest Period then in effect for
that Revolving Credit Loan, (ii) subject to the provisions of Section 2.6E
hereof, any Request for Revolving Credit Loan or Notice of Conversion/
Continuation given by the Borrowers with respect to a requested borrowing or
conversion/ continuation, as applicable, that has not yet occurred shall be
deemed to be rescinded by the Borrowers, and (iii) all Euro-Rate Loans shall
thereupon bear interest at the Default Rate until the Event of Default is cured
or the Revolving Credit Loans are respectfully paid in full to the Banks and the
Revolving Loan Commitments have expired or have been terminated by the Borrowers
or the Banks.
2.7 Letters of Credit.
A. Letters of Credit. Subject to the terms and conditions of this
Loan Agreement and in reliance upon the representations and warranties of the
Borrowers set forth herein, the Borrowers may request, in accordance with the
provisions of this Section 2.7A, that on and after the Closing Date, PNC issue
Letters of Credit for the account of the Borrowers denominated in Dollars.
Issuances of Letters of Credit shall be subject to the following limitations:
(i) The Borrowers may not request that PNC issue any
Letter of Credit if, after giving effect to such issuance, (y) the total Letter
of Credit Usage would exceed Ten Million Dollars ($10,000,000.00), or (z) the
Total Utilization of Revolving Loan Commitments would exceed the Revolving Loan
Commitments, as the amount available under such Revolving Loan Commitments may
be reduced from time to time pursuant to Section 2.4C hereof.
(ii) In no event shall PNC issue, reissue, amend or permit
the extension of: (y) any Letter of Credit having an expiration date later than
the Revolving Loan Commitment Termination Date in effect at the time of
issuance, reissuance, amendment or extension (automatic or otherwise) thereof;
or (z) subject to the foregoing clause (y), any Letter of Credit having an
expiration date more than one year after its date of issuance; provided that
subject to the foregoing clause (y), this clause (z) shall not prevent PNC from
agreeing that a Letter of Credit will automatically be extended annually for one
or more periods each not to exceed one year if PNC does not cancel such
extension, subject to the Banks extending the Revolving Loan Commitment
Termination Date.
It shall be a condition precedent to the issuance of any Letter of
Credit in accordance with the provisions of this Section 2.7 that each condition
set forth in Sections 5.1 and 5.2A and B of this Loan Agreement shall have been
satisfied.
Immediately upon the issuance of each Letter of Credit, each Bank shall
be deemed to, and hereby agrees to, have irrevocably purchased from PNC a
participation in such Letter of Credit and drawings thereunder in an amount
equal to such Bank's Revolving Credit Facility Pro
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Rata Share of the maximum amount which is or at any time may become available to
be drawn thereunder.
Each Letter of Credit shall provide that it shall be subject to the
Uniform Customs and Practice of Documentary Credits (1993 Revision),
International Chamber of Commerce Brochure No. 500, or any successor thereto.
Each Letter of Credit may provide that PNC may (but shall not be required to)
pay the beneficiary thereof upon the occurrence of an Event of Default and the
acceleration of the maturity of the Revolving Loans or, if payment is not then
due to the beneficiary, provide for the deposit of funds in an account to secure
payment to the beneficiary and that any funds so deposited shall be paid to the
beneficiary of the Letter of Credit if conditions to such payment are satisfied
or returned to PNC for distribution to the Banks (or, if all Obligations shall
have been indefeasibly paid in full, to the Borrowers) if no payment to the
beneficiary has been made and thirty (30) days after the final date available
for drawings under the Letter of Credit has passed. Each payment or deposit of
funds by PNC as provided in this paragraph shall be treated for all purposes of
this Loan Agreement as a drawing duly honored by PNC under the related Letter of
Credit.
B. Notice of Issuance. Whenever a Borrower desires the issuance
of a Letter of Credit, Res-Care, as agent for such Borrower, shall deliver to
PNC an Application and Agreement for Letter of Credit in the form of Exhibit C
annexed hereto no later than 10:00 A.M. (Louisville, Kentucky time) at least ten
(10) Business Days, or in each case such shorter period as may be agreed to by
PNC in any particular instance, in advance of the proposed date of issuance. The
Application and Agreement for Letter of Credit shall specify (i) the proposed
date of issuance (which shall be a Business Day under the laws of the
Commonwealth of Kentucky), (ii) the face amount of the Letter of Credit, (iii)
the expiration date of the Letter of Credit, (iv) the name and address of the
beneficiary of the Letter of Credit, and (v) a summary of the purpose and
contemplated terms of the Letter of Credit. Prior to the date of issuance of any
Letter of Credit, Res-Care shall specify a precise description of the documents
and the proposed text of any certificate to be presented by the beneficiary
under such Letter of Credit which, if presented by the beneficiary prior to the
expiration date of the Letter of Credit, would require PNC to make payment under
the Letter of Credit; provided that PNC, in its sole reasonable judgment, may
require changes in any such documents and certificates; provided further that no
Letter of Credit shall require payment against a conforming draft to be made
thereunder on the same Business Day (under the laws of the Commonwealth of
Kentucky) that such draft is presented if such presentation is made after 11:00
A.M. (Louisville, Kentucky time) on such Business Day. In determining whether to
pay under any Letter of Credit, PNC shall be responsible only to determine that
the documents and certificates required to be delivered under that Letter of
Credit have been delivered and that they comply on their face with the
requirements of that Letter of Credit; provided, further, nothing contained in
this Section 2.7B shall be deemed to prejudice the right of the Borrowers to
recover from PNC in respect of any amounts paid by PNC under any Letter of
Credit in the event that it is determined by a court of competent jurisdiction
that the payment with respect to such Letter of Credit by PNC constituted gross
negligence or willful misconduct on the part of PNC.
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C. Delivery of Copies of Letters of Credit and Letter of Credit
Amendments. PNC shall, promptly after the issuance of each Letter of Credit, or
any amendment or cancellation thereto, furnish to the Banks a copy of such
Letter of Credit or of such amendment or cancellation, as the case may be,
together with, in the case of the issuance of any Letter of Credit, the amount
of its risk participation therein, which shall be such Bank's Revolving Credit
Facility Pro Rata Share of the stated amount of such Letter of Credit.
D. Payment of Amounts Drawn Under Letters of Credit. In the event
of any drawing under any Letter of Credit by the beneficiary thereof, PNC shall
promptly notify the Borrowers and the Banks of such drawing, and the Borrowers
shall reimburse PNC on the date on which such drawing is honored in an amount in
same day funds equal to the amount of such drawing. The Borrowers shall have the
right to obtain a Revolving Credit Loan (subject to the limitations set forth in
Section ▇.▇▇ hereof and in the absence of any Event of Default hereunder) in an
amount sufficient to repay in full any such drawing honored by PNC under a
Letter of Credit.
E. Payment by Banks with Respect to Letters of Credit. In the
event that the Borrowers shall fail to reimburse PNC as provided in Section 2.7D
hereof in an amount equal to the amount of any drawing honored by PNC under a
Letter of Credit issued by PNC, PNC shall promptly notify each of the other
Banks of the unreimbursed amount of such drawing and of each Bank's
participation therein, which participation shall be equal to such Bank's
Revolving Credit Facility Pro Rata Share of the unreimbursed amount of such
drawing. Each Bank shall make available to PNC an amount equal to its
participation in same day funds, at the offices of PNC located at ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ not later than 1:00 P.M. (Louisville,
Kentucky time) on the Business Day (under the laws of Commonwealth of Kentucky)
after the date notified by PNC, and each such amount so made available by each
Bank will be deemed a Revolving Credit Loan made by such Bank to the Borrowers
under this Loan Agreement as of the date such amount is so made available to
PNC. In the event that any Bank fails to make available to PNC the amount of
such Bank's participation in such Letter of Credit as provided in this Section
2.7E, PNC shall be entitled to recover such amount on demand from such Bank
together with interest at the customary rate set by PNC for the correction of
errors among banks for three Business Days and thereafter at the Federal Funds
Effective Rate. Nothing in this Section 2.7 shall be deemed to prejudice the
right of any Bank to recover from PNC any amounts made available by such Bank to
PNC pursuant to this Section 2.7E in the event that it is determined by a court
of competent jurisdiction that the payment made by PNC with respect to a Letter
of Credit in respect of which reimbursement was made by such Bank constituted
gross negligence or willful misconduct on the part of PNC. PNC shall distribute
to the each other Bank, to the extent that it has paid all amounts payable by it
under this Section 2.7E with respect to any Letter of Credit issued by PNC, such
Bank's Revolving Credit Facility Pro Rata Share of all payments received by PNC
from the Borrowers in reimbursement drawings honored by PNC under such Letter of
Credit, as the case may be, when such payments are received. Notwithstanding
anything to the contrary herein, each Bank shall have a direct to reimbursement
of such amounts from the Borrowers, subject to the procedures for reimbursing
such Bank set forth in this Section 2.7.
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F. Compensation. The Borrowers agree to pay, without duplication,
the following amounts to PNC with respect to each such Letter of Credit issued
by PNC for the account of the Borrowers:
(i) With respect to each Letter of Credit, a letter of
credit fee (the "Letter of Credit Fee") payable to PNC for the account of the
Banks (and to be shared by the Banks pro rata in accordance with their
respective Revolving Credit Facility Pro Rata Shares) equal to the Applicable
Letter of Credit Percentage multiplied by the maximum amount available from time
to time to be drawn under such Letter of Credit; provided that, on each Date of
Determination, commencing with the first Date of Determination to occur after
the Closing Date, the applicable Letter of Credit Percentage in effect for the
Pricing Period commencing on such Date of Determination and continuing for the
term of the Pricing Period that begins on such Date of Determination shall be
the Applicable Letter of Credit Percentage corresponding to the Pricing Level in
effect for such Pricing Period, as follows:
Pricing Level Applicable Letter of Credit Percentage
------------- --------------------------------------
Level I 0.75%
Level II 1.00%
Level III 1.25%
Level IV 1.50%
Level V 1.75%
The Letter of Credit Fee, as based on the Applicable Letter of Credit
Percentage, shall be payable quarterly in advance beginning on the date of
issuance of such Letter of Credit and quarterly in advance beginning on the
date, if such should occur, of each renewal or extension of such Letter of
Credit;
(ii) with respect to drawings made under any Letter of
Credit, interest, payable in immediately available funds to PNC on demand, on
the amount paid by PNC in respect of each such drawing from the date of the
drawing through the date such amount is reimbursed by the Borrowers at a
variable rate equal to the Prime Rate;
(iii) with respect to the issuance, amendment or transfer
of each Letter of Credit and each drawing made thereunder, documentary and
processing charges payable to PNC in accordance with PNC's standard schedule for
such charges in effect at the time of such issuance, amendment, transfer or
drawing, as the case may be;
(iv) promptly upon receipt by PNC of the amount described
in subdivisions (ii) and (iii) of this Section 2.7F, PNC shall distribute to
each Bank its Pro Rata Share of such amount.
(v) With respect to each Letter of Credit, a letter of
credit fronting fee (the "Letter of Credit Fronting Fee") payable to PNC for its
own account, in the amount of one
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eighth of one percent (0.125%) multiplied by the aggregate face amount of
Letters of Credit outstanding during a Fiscal Quarter, payable quarterly in
advance.
(vi) The Letters of Credit issued under the Old Loan
Agreement and outstanding as of the Closing Date are deemed to be issued and
outstanding under this Loan Agreement. To the extent that fees have been paid
with respect to such Letters of Credit, no fees shall be due under this Section
2.7F for such Letters of Credit until the date on which fees would otherwise be
due for such Letters of Credit.
G. Obligations Absolute; Indemnification, Nature of PNC's Duties.
Subject to the right of the Borrowers and the Banks to seek damages in the event
that a court of competent jurisdiction determines that PNC acted in bad faith
and/or committed gross negligence or willful misconduct in honoring any draft
presented under any Letter of Credit issued by PNC, the obligation of the
Borrowers to reimburse PNC for drawings made under such Letter of Credit and the
obligation of the Banks under Section 2.7E hereof to reimburse PNC in accordance
with their Pro Rata Shares for drawings made under such Letter of Credit shall
be unconditional and irrevocable and shall be paid strictly in accordance with
the terms of this Loan Agreement under all circumstances including, without
limitation, the following circumstances:
(i) any lack of validity or enforceability of such Letter
of Credit;
(ii) the existence of any claim, set-off, defense or other
right which the Borrowers may have at any time against a beneficiary or any
transferee of such Letter of Credit (or any Persons for whom any such transferee
may be acting), the Administrative Bank, any Bank or any other Person, whether
in connection with this Loan Agreement, the transactions contemplated herein or
any unrelated transaction (including any underlying transaction between the
Borrowers and the beneficiary for which such Letter of Credit was procured);
(iii) any draft, demand, certificate or any other document
presented under such Letter of Credit proving to be forged, fraudulent, invalid
or insufficient in any respect or any statement therein being untrue or
inaccurate in any respect;
(iv) payment by PNC under such Letter of Credit against
presentation of a demand, draft or certificate or other document which does not
comply with the terms of such Letter of Credit;
(v) any other circumstance or happening whatsoever, which
is similar to any of the foregoing; or
(vi) the fact that an Event of Default or a Potential
Event of Default under this Loan Agreement shall have occurred and be
continuing.
In addition to amounts payable as elsewhere provided in this Section 2,
the Borrower hereby agrees to protect, indemnify, pay and save PNC harmless from
and against any all claims, demands, liabilities, damages, losses, costs,
charges and expenses (including reasonable
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attorneys' fees but excluding allocated costs of internal counsel), which PNC
may incur or be subject to as a consequence, direct or indirect, of (i) the
issuance of the Letters of Credit, other than as a result of bad faith, gross
negligence or wilful misconduct of PNC as determined by a court of competent
jurisdiction, or (ii) the failure of PNC to honor a drawing under any Letter of
Credit as a result of any act or omission, whether rightful or wrongful, of any
present or future de jure or de facto government or governmental authority.
As between the Borrower and PNC, the Borrower assumes all risks of the
acts and omissions of, or misuse of the Letters of Credit issued by PNC for the
account of the Borrowers by, the respective beneficiaries of such Letters of
Credit. In furtherance and not in limitation of the foregoing, PNC shall not be
responsible: (i) for the form, validity, sufficiency, accuracy, genuineness or
legal effect of any document submitted by any party in connection with the
application for and issuance of the Letters of Credit, even if it should in fact
prove to be in any or all respects invalid, insufficient, inaccurate, fraudulent
or forged; (ii) for the validity or sufficiency of any instrument transferring
or assigning or purporting to transfer or assign any Letter of Credit or the
rights or benefits thereunder or proceeds thereof, in whole or in part, which
may prove to be invalid or ineffective for any reason; (iii) for failure of the
beneficiary of any such Letter of Credit to comply fully with conditions
required in order to draw upon such Letter of Credit; (iv) for errors,
omissions, interruptions or delays in transmission or delivery of any messages,
by mail, cable, telegraph, telex or otherwise, whether or not they be in cipher;
(v) for errors in interpretation of technical terms; (vi) for any loss or delay
in the transmission or otherwise of any document required in order to make a
drawing under any such Letter of Credit or of the proceeds thereof; (vii) for
the misapplication by the beneficiary of any such Letter of Credit of the
proceeds of any drawing under such Letter of Credit; and (viii) for any
consequences arising from causes beyond the control of PNC, including, without
limitation, any act or omission, whether rightful or wrongful, of any present or
future government agency or authority. None of the above shall affect, impair,
or prevent the vesting of any of PNC's rights or powers hereunder; provided
however, that PNC shall be responsible for any payment PNC makes under any
Letter of Credit against presentation of a demand, draft or certificate or other
document which does not comply with the terms of such Letter of Credit in the
event such payment constitutes bad faith, gross negligence or willful misconduct
of PNC as determined by a court of competent jurisdiction.
In furtherance and extension and not in limitation of the specific
provisions hereinabove set forth, any action taken or omitted by PNC under or in
connection with the Letters of Credit issued by it or the related certificates,
if taken or omitted in good faith and without bad faith, gross negligence or
willful misconduct, shall not put PNC under any resulting liability to the
Borrowers or the Banks.
Notwithstanding anything to the contrary contained in this Section 2.7,
the Borrowers shall have no obligation to indemnify PNC in respect of any
liability incurred by PNC arising out of the bad faith, gross negligence or
willful misconduct of PNC, as determined by a court of competent jurisdiction,
or out of the wrongful dishonor by PNC of proper demand for payment made under
the Letters of Credit issued by it.
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H. Computation of Interest. Interest payable pursuant to this
Section 2.7 shall be computed on the basis of a 360-day year and the actual
number of days elapsed in the period during which it accrues.
I. Amendments. The Borrowers may request that PNC enter into one
or more amendments of any Letter of Credit issued by PNC for the account of the
Borrowers by delivering to PNC an Application and Agreement For Letter of Credit
specifying (i) the proposed date of the amendment, and (ii) the requested
amendment. PNC shall be entitled to enter into amendments with respect to the
Letters of Credit issued by it; provided however that any such amendment
extending the expiry date, changing the Letter of Credit Fee, or increasing the
stated amount of any Letter of Credit shall only be permitted if PNC would be
permitted to issue a new Letter of Credit having such an expiry date, different
Letter of Credit Fee, or stated amount under this Section 2.7 on the date of the
amendment.
J. Additional Payments. If by reason of (i) any change in
applicable law, regulation, rule, decree or regulatory requirement or any change
in the interpretation or application by any judicial or regulatory authority of
any law, regulation, rule, decree or regulatory requirement or (ii) compliance
by PNC with any direction, request or requirement (whether or not having the
force of law) of any governmental or monetary authority including, without
limitation, Regulation D:
(a) any reserve, deposit or similar requirement is or shall be
applicable, imposed or modified in respect of any Letter of Credit
issued by PNC; or
(b) there shall be imposed on PNC any other condition regarding this
Section 2.7 or any Letter of Credit;
and the result of the foregoing is to directly or indirectly increase the cost
to PNC of issuing, making or maintaining any Letter of Credit, or to reduce the
amount receivable in respect thereof by PNC (other than an increase in cost or
reduction in amounts receivable as consequence of any Tax, which shall be
governed by the provisions of Section 4 hereof), then and in any such case PNC
may, at any time within a reasonable period after the additional cost is
incurred or the amount received is reduced, notify the Borrowers, and the
Borrowers shall pay on demand such amounts as PNC may specify to be necessary to
compensate PNC for such additional cost or reduced receipt, together with
interest on such amount from ten (10) days after the date of such demand until
payment in full thereof at a rate equal at all times to the Prime Rate. The
determination by PNC of any amount due pursuant to this Section 2.7J as set
forth in a certificate setting forth the calculation thereof in reasonable
detail, shall, in the absence of manifest or demonstrable error, be final and
conclusive and binding on the Borrowers.
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SECTION 3
SWING LINE CREDIT FACILITY
Subject to the terms and conditions of this Loan Agreement, PNC hereby
agrees to make Swing Line Loans to the Borrowers under the Swing Line Credit
Facility.
3.1 Swing Line Credit Facility. From the date hereof throughout the
Swing Line Commitment Period, and subject to the terms, conditions and other
provisions of this Agreement, PNC agrees to make Swing Line Loans to the
Borrowers from time to time in a total amount not exceeding Seven Million Five
Hundred Thousand Dollars ($7,500,000.00) in amounts of Twenty Five Thousand
Dollars ($25,000) and integral multiples of Five Thousand Dollars ($5,000) in
excess thereof. The Swing Line Credit Facility is established for the
administrative convenience of the Borrowers, PNC and the Banks. During the Swing
Line Commitment Period the Borrowers may borrow and repay advances under the
Swing Line Credit Facility in whole or in part, and reborrowing all in
accordance with the terms, conditions and other provisions of this Agreement.
The making of each Swing Line Loan shall be subject to the further provisions of
this Section 3.1, and shall be subject to all of the conditions of lending
stated in Section 5.2 being fulfilled at the time of each Swing Line Loan, and
provided further that each Swing Line Loan shall be on the terms and subject to
the conditions hereinafter stated.
A. Interest. Swing Line Loans shall bear interest (calculated on
the basis that an entire year's interest is earned in 365 or 366 days as the
case may be) from the date of each such Swing Line Loan until repaid at an
annual rate equal to the Offered Rate. After maturity, whether by acceleration
or scheduled maturity, until paid in full, or when and so long as there shall
exist any uncured Default, Swing Line Loans shall bear interest at the
applicable Default Rate. Interest shall be due and payable to PNC at the end of
each calendar quarter following receipt of a statement from PNC, and on the
Swing Line Commitment Termination Date.
B. Principal. The Borrowers shall pay all principal of Swing Line
Loans on the Swing Line Commitment Termination Date.
C. Swing Line Note. The obligations of the Borrowers to repay
Swing Line Loans shall be evidenced by a promissory note (the "Swing Line Note")
substantially in the form of Exhibit "C" attached hereto.
D. Conditions for Swing Line Loans. So long as no Event of
Default or Default shall have occurred and be continuing, during the Swing Line
Commitment Period, the Borrowers may borrow, repay and reborrow under the Swing
Line Credit Facility on any Business Day, subject to the terms, conditions and
other provisions of this Agreement. The making of Swing Line Loans will be
conditioned upon receipt by PNC from the Borrowers of a Request for Swing Line
Loan by 12:00 noon Louisville, Kentucky, time on the Business Day of the
requested Swing Line Loan. Notwithstanding the foregoing, PNC may, in its sole
discretion, accept an oral or written request made on behalf of the Borrowers by
an Authorized Officer by telephone, telex, facsimile or some other form of
written electronic communication,
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41
in which case PNC shall be entitled to rely on any such oral or written request
received by PNC in good faith from anyone reasonably believed by PNC to be an
Authorized Officer. The Borrowers shall promptly confirm any such communication
by delivery of a Request for Swing Line Loan upon request of PNC. Disbursements
of, and payments of principal with respect to Swing Line Loans may be evidenced
by notations of PNC or its electronic data processing equipment. The aggregate
amount of all disbursements of Swing Line Loans made and shown on PNC's
electronic data processing equipment, over all of the payments of principal made
by the Borrowers and recorded on PNC's electronic data processing equipment
shall be prima facie evidence of the outstanding principal balance due under the
Swing Line Note.
E. General Provisions Regarding Payments.
(i) Manner and Time of Payment. All payments of principal,
interest and fees hereunder and under the Swing Line Note by the Borrowers shall
be made without defense, setoff and counterclaim and in same day funds and
delivered to PNC not later than 11:00 A.M. (Louisville, Kentucky time) on the
due date therefor at its office located in Louisville, Kentucky; funds received
by PNC after that time shall be deemed to have been paid by the Borrowers on the
next succeeding Business Day.
(ii) Payments on Business Days. Whenever any payment to be
made hereunder or under the Swing Line Credit Facility shall be stated to be due
on a day that is not a Business Day, such payment shall be made on the next
succeeding Business Day (unless no further Business Day occurs in such month, in
which case payment shall be made on the next preceding Business Day) and such
extension of time shall be included in the computation of the payment of
interest hereunder or under the Swing Line Note.
F. Voluntary Reduction of Swing Line Loan Commitment. The
Borrowers shall have the right, at any time and from time to time, to terminate
in whole or permanently reduce in part, without premium or penalty, the Swing
Line Loan Commitment. The Borrowers shall give not less than five (5) Business
Days' prior written notice to PNC designating the date (which shall be a
Business Day) of such termination or reduction and the amount of any partial
reduction of the Swing Line Loan Commitment. Such termination or partial
reduction of the Swing Line Loan Commitment shall be effective on the date
specified in the Borrowers' notice. Any such partial reduction of the Swing Line
Loan Commitment shall be in a minimum amount of One Million Dollars
($1,000,000.00).
G. Other Banks. Swing Line Loans will be made by PNC, in its
individual capacity. Upon a request to reduce the principal amount outstanding
Swing Line Loans from the Administrative Bank, the Banks shall make advances
based on their Revolving Credit Facility Pro Rate Shares in amounts sufficient
to effect the requested reduction in Swing Line Loans.
H. Limitation. The Borrowers may not request that PNC make any
Swing Line Loan if, after making such Swing Line Loan, (y) the total aggregate
principal amount of outstanding Swing Line Loans would exceed Seven Million Five
Hundred Thousand Dollars
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($7,500,000.00), or (z) the Total Utilization of Revolving Loan Commitments
would exceed the Revolving Loan Commitments, as the amount available under such
Revolving Loan Commitments may be reduced from time to time pursuant to Section
2.4C hereof.
3.2 Use of Proceeds.
A. Swing Line Loans. The principal of the Swing Line Loans shall
be used by Borrowers for any lawful corporate purposes.
B. Margin Regulations. No portion of the principal of the Swing
Line Loans shall be used by the Borrowers in any manner which might cause the
making of the Swing Line Loan or the application of the proceeds thereof to
violate Regulation G, Regulation U, Regulation T, or Regulation X of the Board
of Governors of the Federal Reserve System or any other regulation of such Board
or to violate the Securities and Exchange Act of 1934, in each case as in effect
on the date or dates of each Swing Line Loan. If requested by PNC, the Borrowers
shall execute and deliver to PNC a completed Federal Reserve Form U-1.
SECTION 4
INCREASED COSTS; TAXES; CAPITAL ADEQUACY
4.1 Compensation for Increased Costs and Taxes. In the event that the
Banks shall determine in good faith (which determination shall, absent manifest
or demonstrable error, be final and conclusive and binding upon both the
Borrowers and the Banks) that any law, treaty or governmental rule, regulation
or order, or any change therein or in the interpretation, administration or
application thereof (including the introduction of any new law, treaty or
governmental rule, regulation or order), or any determination of a court or
governmental authority, in each case that becomes effective after the Closing
Date, or compliance by the Banks with any guideline, request or directive issued
or made after the date hereof by any central bank or other governmental or
quasi-governmental authority, and which has the force of law and first becomes
effective after the Closing Date:
(i) subjects any Bank (or its applicable lending office)
to any additional Covered Tax with respect to this Loan Agreement or any of the
Revolving Credit Loans or (in the case of PNC) the Swing Line Loans or any of
its other obligations hereunder, or changes the basis of taxation of payments to
such Bank (or its applicable lending office) of principal, interest, fees or any
other amount payable hereunder (but not changes in Excluded Taxes);
(ii) imposes, modifies or holds applicable any additional
reserve (including without limitation any marginal, emergency, supplemental,
special or other
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reserve), special deposit, compulsory loan, FDIC insurance or similar
requirement against assets held by, or deposits or other liabilities in or for
the account of, or advances or loans by, or other credit extended by, or any
other acquisition of funds by, any Bank (or its applicable lending office)
(other than any such reserve or other requirements with respect to Euro-Rate
Loans that are reflected in the definition of Euro-Rate); or
(iii) imposes any other condition on or affecting any Bank
(or its applicable lending office) or its obligations hereunder or the London
interbank market, other than with respect to Taxes;
and the result of any of the foregoing is to increase the cost to any Bank of
agreeing to make, making or maintaining Revolving Credit Loans or (in the case
of PNC) the Swing Line Loans hereunder or to reduce any amount received or
receivable by any Bank (or its applicable lending office) with respect thereto,
then, in any such case, the Borrowers shall promptly pay to such Bank, upon
demand, such additional amount or amounts (in the form of an increased rate of,
or a different method of calculating, interest as such Bank in its reason able
discretion shall determine) as may be necessary to compensate such Bank on an
after-tax basis for any such increased cost or reduction in amounts received or
receivable hereunder; provided that any increased cost arising as a result of
any of the foregoing other than in respect of Taxes shall apply only to
Euro-Rate Loans to the extent the same bear interest by reference to the
Euro-Rate. The Bank seeking reimbursement for such amounts from the Borrowers
shall deliver to the Borrowers a written statement setting forth in reasonable
detail the basis for calculating the additional amounts owed to such Bank under
this Section 4.1, which statement shall be conclusive and binding upon both
parties hereto absent manifest or demonstrable error.
4.2 Withholding of Taxes.
A. Payments to Be Free and Clear. All sums payable by the
Borrowers under this Loan Agreement and the other Loan Instruments to or for the
benefit of any Bank or any Person who acquires any interest in the Revolving
Credit Loans pursuant to the provisions hereof shall be paid free and clear of
and (except to the extent required by law) without any deduction or withholding
on account of any Covered Tax imposed, levied, collected, withheld or assessed
by or within the United States of America or any political subdivision in or of
the United States of America or any other jurisdiction from or to which a
payment is made by or on behalf of the Borrowers or by any federation or
organization of which the United States of America or any such jurisdiction is a
member at the time of payment.
B. Grossing-up of Payments. If the Borrowers or any other Person
is required by law to make any deduction or withholding on account of any
Covered Tax from any sum paid or payable by the Borrowers to any Bank under any
of the Loan Instruments:
(i) The Borrowers shall notify such Bank of any such
requirement or any change in any such requirement as soon as the Borrowers
becomes aware of it;
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(ii) The Borrowers shall pay any such Tax before the date
on which penalties attach thereto, such payment to be made (if the liability to
pay is imposed on the Borrowers) for their own account or (if that liability is
imposed on such Bank) on behalf of and in the name of such Bank;
(iii) The sum payable by the Borrowers in respect of which
the relevant deduction, withholding or payment is required shall be increased to
the extent necessary to ensure that, after the making of that deduction,
withholding or payment, such Bank receives on the due date and retains (free
from any liability in respect of any such deduction, withholding or payment) a
net sum equal to what it would have received and so retained had no such
deduction, withholding or payment in respect of Covered Taxes been required or
made; and
(iv) Within thirty (30) days after paying any sum from
which it is required by law to make any deduction or withholding, and within
thirty (30) days after the due date of payment of any Tax which it is required
to pay by clause (ii) above, the Borrowers shall deliver to such Bank evidence
satisfactory to such Bank of such deduction, withholding or payment and of the
remit thereof to the relevant taxing or other authority;
provided that no such additional amount shall be required to be paid to any Bank
under clause (iii) above except to the extent that any change after the date
hereof in any such requirement for a deduction, withholding or payment as is
mentioned therein shall result in an increase in the rate of such deduction,
withholding or payment from that in effect at the date of this Loan Agreement in
respect of payments to such Bank.
C. Tax Refund. If the Borrowers determine in good faith that a
reasonable basis exists for contesting a Covered Tax, the relevant Bank or Tax
Transferee, as applicable, shall cooperate with the Borrowers in challenging
such Tax at the Borrowers' expense if requested by the Borrowers (it being
understood and agreed that no Bank shall have any obligation to contest, or any
responsibility for contesting, any Tax). If any Tax Transferee or any Bank, as
applicable, receives a refund (whether by way of a direct payment or by offset
of any Covered Tax for which a payment has been made pursuant to this Section 4)
the amount of such refund (together with any interest received thereon) shall be
paid to the Borrowers to the extent payment has been made in full pursuant to
this Section 4.
4.3 Capital Adequacy Adjustment. If any Bank shall have determined in
good faith that the adoption, effectiveness, phase-in or applicability of any
law, rule or regulation (or any provision thereof) regarding capital adequacy,
or any change therein or in the interpretation or administration thereof by any
governmental authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by any Bank (or its
applicable lending office) with any guideline, request or directive regarding
capital adequacy of any such governmental authority, central bank or comparable
agency, and which has the force of law and first becomes effective after the
Closing Date, has or will have the effect of reducing the rate of return on the
capital of such Bank or any
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corporation controlling such Bank as a consequence of, or with reference to,
such Bank's Revolving Credit Loans or Revolving Loan Commitment or other
obligations hereunder to a level below that which such Bank or such controlling
corporation would have achieved but for such adoption, effectiveness, phase-in,
applicability, change or compliance (taking into consideration the policies of
such Bank or such controlling corporation with regard to capital adequacy), then
from time to time, within ten (10) Business Days after demand by such Bank, the
Borrowers shall pay to such Bank such additional amount or amounts as will
compensate such Bank or such controlling corporation on an after-tax basis for
such reduction as and when incurred. Each Bank, upon determining in good faith
that any additional amounts will be payable pursuant to this Section 4.3, will
give prompt written notice thereof to the Borrowers, which notice shall set
forth the basis of the calculation of such additional amounts, although the
failure to give any such notice shall not release or diminish any of the
Borrowers' obligations to pay additional amounts under this Section 4.3.
4.4 Banks' Obligation to Mitigate. Each Bank agrees that, as promptly as
practicable after the officer of such Bank responsible for administering the
Revolving Credit Loans under this Loan Agreement becomes aware of the occurrence
of an event or the existence of a condition that would entitle such Bank to
receive payments under Section 2.6 or Section 4 hereof, it will, to the extent
not inconsistent with its internal policies, use reasonable efforts (i) to
make, fund or maintain its Revolving Credit Loans through another lending office
of such Bank, or (ii) take such other reasonable measures if as a result thereof
the additional amounts which would otherwise be required to be paid to such Bank
pursuant to Section 2.6 or Section 4 hereof would be materially reduced and if,
as determined by such Bank in its sole discretion, the making, funding or
maintaining of such Revolving Credit Loans through such other lending office or
in accordance with such other measures, as the case may be, would not otherwise
materially adversely affect such Revolving Credit Loans or the interests of such
Bank; provided that such Bank will not be obligated to utilize such other
lending office pursuant to this Section 4.4 unless the Borrowers agree to pay
all expenses incurred by such Bank in utilizing such other lending office. A
certificate as to the amount of any such expenses payable by the Borrowers
pursuant to this Section 4.4 (setting forth in reasonable detail the basis for
requesting such amount) submitted by any Bank to the Borrowers shall be
conclusive absent manifest or demonstrable error.
SECTION 5
CLOSING CONDITIONS
The establishment of the Revolving Credit Facility by the Banks in favor
of the Borrowers, the obtaining of Revolving Credit Loans and/or Letters of
Credit by the Borrowers thereunder, and the making of the Swing Line Loans by
PNC to the Borrowers are subject to the satisfaction of all of the following
conditions:
5.1 Initial Closing Conditions. The obligation of the Banks to make the
initial Revolving Credit Loan to the Borrowers and to make the Swing Line Loans
to the Borrowers are subject to the condition that, in addition to the
satisfaction of the conditions precedent specified in Section 5.2 hereof and,
with respect to the Swing Line Loans, the conditions
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precedent specified in Section 3.lD hereof, as of the Closing Date, the Banks
shall have received the following from the Borrowers, dated the Closing Date or
such other date as shall be acceptable to the Banks:
A. Loan Agreement. This Loan Agreement, duly executed and
delivered by the Borrowers.
B. Revolving Credit Notes. The Revolving Credit Notes, duly
executed and delivered by the Borrowers.
C. Swing Line Note. The Swing Line Note, duly executed and
delivered by the Borrowers.
D. Security Agreements. The Security Agreements, duly and
respectively executed and delivered by each of the Borrowers, granting to the
Banks a security interest in all of the Accounts and General Intangibles of the
Borrowers.
E. UCC-1 Financing Statements. UCC-1 financing statements, duly
and respectively executed and delivered by each of the Borrowers, which, upon
filing in the proper UCC filing offices, will perfect the Banks' security
interest in all of the Accounts and General Intangibles of the Borrowers.
F. Stock Pledge Agreement. The Stock Pledge Agreement, duly
executed and delivered by Res-Care, together with the stock certificates
evidencing all of the issued and outstanding shares of common stock of the
Consolidated Subsidiaries and executed blank stock powers appended thereto.
G. Opinion of Counsel. A written opinion of counsel on behalf of
the Borrowers and the Consolidated Subsidiaries, in form and substance
satisfactory to the Banks.
H. Certificate of Secretary of Res-Care. A Certificate of the
Secretary or Assistant Secretary of Res-Care (i) certifying as to the
authenticity, completeness and accuracy of, and attaching copies of, (a) the
Articles of Incorporation and By-Laws of Res-Care, and (b) Resolutions of the
Board of Directors of Res-Care authorizing Res-Care's execution, delivery and
performance of the Loan Instruments to which Res-Care is a party, and (ii)
certifying the names and true signatures of the officers of Res-Care authorized
to execute and deliver the Loan Instruments to which Res-Care is party, on
behalf of Res-Care.
I. Certificate of Secretary of Each Consolidated Subsidiary. A
Certificate of the Secretary or Assistant Secretary of each Consolidated
Subsidiary (i) certifying as to the authenticity, completeness and accuracy of,
and attaching copies of, (a) the Articles of Incorporation and By-Laws of such
Consolidated Subsidiary, and (b) Resolutions of the Board of Directors of such
Consolidated Subsidiary authorizing the execution, delivery and performance of
the Loan Instruments to which the Consolidated Subsidiary is a party by such
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Consolidated Subsidiary, and (ii) certifying the names and true signatures of
the officers of such Consolidated Subsidiary authorized to execute and deliver
the Loan Instruments to which such Consolidated Subsidiary is a party on behalf
of such Consolidated Subsidiary.
J. Compliance Certificate. A Compliance Certificate in the form
of Exhibit G hereto, completed by Res-Care, on behalf of itself and the other
Borrowers, and executed by the President or Financial Officer of Res-Care, for
itself and as agent for the other the Borrowers, certifying as to the accuracy
of the representations and warranties of the Borrowers set forth in this Loan
Agreement as of the date hereof.
K. Other Documents. Such other documents as the Banks may
reasonably request.
5.2 Conditions to All Revolving Credit Loans, Letters of Credit and
Swing Line Loans. The obligation of the Banks to make each Revolving Credit Loan
on each Funding Date and to issue, through PNC, each Letter of Credit, and the
obligation of PNC to make each Swing Line Loan pursuant to the Swing Line Credit
Facility, is in each case subject to the following additional conditions
precedent:
A. Request for Revolving Credit Loan. The Administrative Bank
shall have received with respect to each Revolving Credit Loan, in accordance
with the provisions of Section ▇.▇▇ of this Loan Agreement, an originally
executed Request For Revolving Credit Loan, in each case signed by an Authorized
Officer of the Borrowers.
B. Letters of Credit. The Administrative Bank shall have received
with respect to each Letter of Credit, in accordance with the provisions of
Section 2.7B of this Loan Agreement, an originally executed Application and
Agreement For Letter of Credit relating to such Letter of Credit, in each case
signed by an Authorized Officer of the Borrowers.
C. Request for Swing Line Loan. PNC shall have received with
respect to each Swing Line Loan, in accordance with the provisions of Section
3.1D of this Loan Agreement, an originally executed Request For Swing Line Loan,
in each case signed by an Authorized Officer of the Borrowers.
D. General Conditions. As of the Funding Date of any Revolving
Credit Loan, the date of issuance or extension of the stated expiration date of
any Letter of Credit, or the date of any Swing Line Loan:
(i) The representations and warranties contained herein
shall be true and correct in all material respects on and as of that date to the
same extent as though made on and as of that date;
(ii) No event shall have occurred and be continuing or
would result from the funding of the Revolving Credit Loan contemplated by such
Request For Revolving
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Credit Loan, the issuance or extension of the stated expiration date of such
Letter of Credit contemplated by such Application and Agreement For Letter of
Credit, or the funding of the Swing Line Loan contemplated by such Request for
Swing Line Loan which would constitute an Event of Default;
(iii) The Borrowers shall have performed in all material
respects all agreements and satisfied all conditions which this Loan Agreement
and the other Loan Instruments provide shall be performed by it on or before
such date;
(iv) No order, judgment or decree of any court, arbitrator
or governmental authority shall purport to enjoin or restrain the Banks from
making that Revolving Credit Loan or issuing, through PNC, that Letter of Credit
or PNC from making such Swing Line Loan; and
(v) There shall not be pending or, to the knowledge of the
Borrowers threatened, any action, suit, proceeding or arbitration or, to the
knowledge of the Borrowers, any governmental investigation pending or
threatened, against or affecting the Borrowers or any property of the Borrowers,
which has not been disclosed by the Borrowers pursuant to Sections 7.3 and 7.6
hereof prior to (a) the making of the last preceding Revolving Credit Loan (or,
in the case of the initial Revolving Credit Loan made hereunder, prior to the
execution of this Loan Agreement), (b) the issuing of the most recent Letter of
Credit (or in the case of the initial Letter of Credit issued hereunder, prior
to the execution of this Loan Agreement) or the most recent extension of the
stated maturity date of any Letter of Credit, or (c) the making of the last
Swing Line Loan (or in the case of the initial Swing Line Loan hereunder, prior
to the execution of this Loan Agreement). Further, there shall have occurred no
development not so disclosed in any such action, suit, proceeding, governmental
investigation or arbitration so disclosed, which, in either event, in the
opinion of the Banks, could reasonably be expected to have a material adverse
effect on the financial condition of the Borrowers. No injunction or other
restraining order shall have been issued and no hearing to cause an injunction
or other restraining order to be issued shall be pending or noticed with respect
to any action, suit or proceeding seeking to enjoin or otherwise prevent the
consummation of this Loan Agreement or the making of the Revolving Credit Loans,
the issuing or extension of the respective stated expiration dates of the
Letters of Credit, and/or the making of the Swing Line Loans hereunder.
E. General Conditions. As of the Funding Date of any Revolving Credit
Loan, the date, the date of issuance or extension of the stated expiration date
of any Letter of Credit, or the date of any Swing Line Loan, the Administrative
Bank shall have received such other documentation as it may reasonably request.
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SECTION 6
REPRESENTATIONS AND WARRANTIES
The Borrowers represent and warrant to the Banks as follows, which
representations and warranties shall be deemed to be continuing representations
and warranties until the Revolving Credit Notes, the Swing Line Note, and the
other obligations have been respectively paid in full to the Banks, the
Revolving Credit Facility has been terminated by the Banks or the Borrowers, the
Swing Line Credit Facility has been terminated by PNC or the Borrowers, and the
Letter of Credit Subfacility has been terminated by PNC or the Borrowers, and
shall survive the execution and delivery of this Loan Agreement:
6.1 Organization, Standing, etc, of the Borrowers. Res-Care is a
corporation duly organized and validly existing under the laws of the
Commonwealth of Kentucky. The Consolidated Subsidiaries are each corporations
duly organized, validly existing and in good standing under the laws of the
State of Delaware. Each of the Borrowers has all requisite power and authority
to own and operate its properties, to carry on its businesses as now conducted
and proposed to be conducted, and to execute and deliver this Loan Agreement and
the other Loan Instruments to which it is a party and to carry out the terms
hereof and thereof. The Borrowers have delivered to the Administrative Bank a
true and complete copy of their Articles of Incorporation and Certificates of
Incorporation (as applicable) and By-Laws as in effect on the date hereof.
6.2 Qualification. Schedule 6.13 hereto sets forth a list of the
Consolidated Subsidiaries and locations in which those Consolidated Subsidiaries
are qualified to do business. No Borrower is presently required to be qualified
to transact business as a foreign corporation in any jurisdiction other than the
states identified in Schedule 6.13 hereto, and except where failure to so
qualify would not have a material adverse effect upon the business or operations
of such Borrower.
6.3 Use of Proceeds. The Borrowers' uses of the proceeds of the
Revolving Credit Loans and the Swing Line Loans and the uses of the Letters of
Credit are and will continue to be legal and proper corporate uses duly
authorized by the Board of Directors of each of the Borrowers, and such uses are
consistent with all applicable laws and statutes as in effect as of the date
hereof.
6.4 Intellectual Property. To the best of the Borrowers' knowledge, the
Borrowers own or possess adequate assets, licenses, patents, patent
applications, copyrights, trademarks, trademark applications, trade names,
franchises, consents, authorizations and service marks and rights with respect
to the foregoing necessary for the conduct of their businesses as presently
conducted and as proposed to be conducted, without any known conflict with the
rights of others.
6.5 Disclosure; Solvency. Neither this Loan Agreement nor any other
document furnished to the Banks by or on behalf of the Borrowers in connection
with the Revolving Credit Facility and/or the Swing Line Loans and/or the other
Obligations taken as a whole
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contains any statement of any material fact which is untrue or omits to state a
material fact necessary in order to make the statements contained herein or
therein not misleading. There is no fact known to the Borrowers which materially
adversely affects or in the future will (so far as the Borrowers can now
foresee) materially adversely affect the business, operations, affairs or
condition of the Borrowers or any of their properties which has not been set
forth in this Loan Agreement or in the other documents furnished to the Banks by
or on behalf of the Borrowers in connection with the Revolving Credit Facility,
the Swing Line Loans and the other Obligations. Res-Care and its Subsidiaries,
on a consolidated basis in accordance with GAAP, are currently solvent; and
neither the issuance and delivery of the Revolving Credit Notes to the Banks and
the Swing Line Note to PNC, nor the obtaining of the Letters of Credit, nor the
performance of the transactions contemplated hereunder or thereunder, will
render Res-Care and its Subsidiaries, on a consolidated basis in accordance with
GAAP, insolvent, inadequately capitalized to undertake the transactions
contemplated hereunder or to undertake the businesses in which they are
presently engaged or about to engage or render the any of Borrowers unable to
pay their debts as they become due; the Borrowers are not contemplating either
the filing of a petition by them or the commencement of a case by them under any
state or federal bankruptcy or insolvency laws or the liquidation of all or a
major portion of their property; and the Borrowers have no knowledge of any
Person contemplating the filing of any such petition or commencement of any such
case against the Borrowers.
6.6 Tax Returns and Payments. To the best of the Borrowers' knowledge
after due inquiry, the Borrowers have filed all tax returns required by law to
be filed by them and have paid all taxes, assessments and other governmental
charges levied upon their properties, assets, income and franchises, other than
those not yet delinquent and those, not substantial in aggregate amount, being
or about to be contested as provided in Section 7.2A hereof. The charges,
accruals and reserves on the books of the Borrowers in respect of their taxes
are adequate in the opinion of the Borrowers. The Borrowers know of no material
unpaid assessment for additional taxes or of any basis therefor.
6.7 Indebtedness, etc. As of the date of this Loan Agreement, and
without regard to the transactions contemplated hereunder, there is no
outstanding Indebtedness of the Borrowers in respect of borrowed money, capital
leases or the deferred purchase price of property, existing guaranties issued by
the Borrowers or existing liens and security interests encumbering the assets of
the Borrowers other than as disclosed in the most recent annual and monthly
financial statements of the Borrowers delivered to the Banks or on Schedule 6.7
attached hereto and made a part hereof.
6.8 Title to Properties; Liens; Leases. The Borrowers have good and
marketable title to all of their properties and assets and none of such
properties or assets is subject to any mortgage, pledge, lien, security
interest, charge or encumbrance other than as described in Section 8.4 hereof.
The Borrowers enjoy quiet possession under all leases to which they are party as
lessee, and all of such leases are to the best knowledge of the Borrowers, after
due inquiry, validly existing and in full force and effect, and, to the best
knowledge of the Borrowers, after due inquiry, neither the lessor nor the
Borrowers as lessee is in default under any of such leases.
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6.9 Litigation, etc. Except for items disclosed in the Res-Care Annual
Report on Form 10-K for Fiscal Year 1995 and items disclosed in the Res-Care
Quarterly Reports on Form 10-Q for the Fiscal Quarters ended March 31, 1996,
June 30, 1996 and September 30, 1996, and items subsequently disclosed pursuant
to Form 10-Ks and Form 10-Qs for periods ended after September 30, 1996, there
is no action, proceeding or investigation pending or, to the best knowledge of
the Borrowers, threatened (or any basis therefor known to the Borrowers) (i)
which questions the validity of this Loan Agreement, the Revolving Credit Notes,
the Swing Line Note, the Stock Pledge Agreement or the other Loan Instruments or
any action taken or to be taken pursuant hereto or thereto, (ii) which is not
fully covered by insurance other than any applicable deductible, or (iii) which
might result, either in any case or in the aggregate, in any material adverse
change in the businesses, operations, affairs or condition of the Borrowers or
in any of their properties or assets or in any material liability on the part of
the Borrowers. Except for items disclosed in the Res-Care Annual Report on Form
10-K for Fiscal Year 1995 and items disclosed in the Res-Care Quarterly Reports
on Form 10-Q for the Fiscal Quarters ended March 31, 1996, June 30, 1996 and
September 30, 1996 and items subsequently disclosed pursuant to Form 10-Ks and
Form 10-Qs for periods ended after September 30, 1996, the Borrowers have
provided the Administrative Bank with a list of all pending actions, proceedings
and investigations involving (y) claims against the Borrowers seeking damages in
excess of $1,000,000 in any individual case or in excess of $2,500,000 in the
aggregate which is not fully covered by insurance other than any applicable
deductible, and (z) claims of the Borrowers for payment, reimbursement or under
contracts in excess of $1,000,000 or in excess of $2,500,000 in the aggregate.
6.10 Authorization; Compliance With Other Instruments, etc. The
execution, delivery and performance of this Loan Agreement, the Revolving Credit
Notes, the Swing Line Note, and the other Loan Instruments to which the
Borrowers are party have been duly authorized by all necessary corporate action
on the part of the Borrowers, will not result in any violation of or be in
conflict with or constitute a default under any term of the Articles of
Incorporation or Certificate of Incorporation, as applicable, or By-Laws of the
Borrowers or of any agreement, instrument, judgment, decree, order, statute,
rule or governmental regulation applicable to the Borrowers, or result in the
creation of any mortgage, lien, charge or encumbrance upon any of the properties
or assets of the Borrowers pursuant to any such term. The Borrowers are not in
violation of any term of their Articles of Incorporation or Certificate of
Incorporation, as applicable, or By-Laws, or of any material term of any
agreement or instrument to which they are party, or, to the Borrowers' best
knowledge, of any judgment, decree, order, statute, rule or governmental
regulation applicable to the Borrowers. Without limiting the generality of the
foregoing, to the best knowledge of the Borrowers, the Borrowers are in
compliance in all material respects with all federal and state laws and all
rules, regulations and administrative orders of all state and local commissions
or authorities which are applicable to the Borrowers or to the operation of
their businesses.
6.11 Enforceability. This Loan Agreement, the Revolving Credit Notes,
the Swing Line Note, the Stock Pledge Agreement and the other Loan Instruments
to which the Borrowers are party constitute legal, valid and binding obligations
of the Borrowers, enforceable against the Borrowers in accordance with their
respective terms, except to the
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extent the enforceability hereof and thereof may be limited by applicable laws
affecting creditors, rights generally and by equitable principles.
6.12 Governmental Consent. To the best knowledge of the Borrowers, the
Borrowers are not required to obtain any order, consent, approval or
authorization of, and is not required to make any declaration or filing with,
any governmental authority in connection with the execution and delivery of this
Loan Agreement, the Revolving Credit Notes, the Swing Line Note, the Stock
Pledge Agreement or the other Loan Instruments to which the Borrowers are party.
6.13 Consolidated Subsidiaries. All of Res-Care's Consolidated
Subsidiaries as of the date of this Loan Agreement are listed on Schedule 6.13
annexed hereto.
SECTION 7
AFFIRMATIVE COVENANTS
The Borrowers hereby covenant and agree that until the Revolving Credit
Notes and the other Obligations have been respectively paid in full to the
Banks, the Swing Line Note has been paid in full to PNC, the Revolving Credit
Facility has been terminated by the Banks or the Borrowers, the Swing Line
Credit Facility has been terminated by PNC or the Borrowers, and the Letter of
Credit Subfacility has been terminated by PNC or the Borrowers, the Borrowers
will perform and observe all of the following provisions:
7.1 Maintenance of Properties, etc. The Borrowers will, insofar as they
are not prevented by causes beyond their control, maintain or cause to be
maintained in good repair, working order and condition all properties used or
useful in the businesses of the Borrowers. The Borrowers will maintain or cause
to be maintained, with financially sound and reputable insurers, insurance with
respect to their properties and businesses against loss or damage of the kinds
customarily insured against by corporations of established reputation engaged in
the same or a similar business and similarly situated, in such types and amounts
as are customarily carried under similar circumstances by such other
corporations. The Banks have no basis to conclude that the Borrowers' current
insurance, including their current worker compensation insurance, is deficient
in any material respect.
7.2 Money Obligations, Payment of Taxes, ERISA, etc.
A. Governmental Obligations. The Borrowers will pay promptly as
they become due and payable all taxes, assessments and other governmental
charges levied upon it or their income or upon any of their properties or assets
or in respect of their franchises, businesses, income or profits, or upon any
part thereof, as well as all lawful claims of any kind (including claims for
labor, materials and supplies) which, if unpaid, might by law become a lien or a
charge upon their property before any of the same become delinquent; provided
that no such tax, assessment or charge need be paid if being contested in good
faith and by appropriate proceedings promptly initiated and diligently conducted
by the Borrowers
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and if such reserve or other appropriate provision, if any, as shall be required
by GAAP shall have been made therefor. The Borrowers will satisfy or cause to be
satisfied the minimum annual funding standard within the meaning of ERISA for
any employee benefit plan established or maintained by the Borrowers which is
subject to ERISA, and the Borrowers will not permit any tax or penalty to be
incurred by it as a result of any failure to satisfy any such minimum funding
requirement or as a result of any violation of the provisions of Section 4975 of
the Code, or of any regulation issued thereunder.
B. Other Obligations. The Borrowers will pay in full all their
other debts, obligations and liabilities allowed hereunder before the same
become delinquent, unless the same are being contested in good faith by the
Borrowers, the Borrowers have established adequate reserves for the payment of
the same in accordance with GAAP, and the contesting thereof does not involve
the risk of forfeiture or loss of any of the Borrowers' assets.
7.3 Financial Statements and Reports. The Borrowers will furnish to
the Administrative Bank:
(i) As soon as reasonably possible, and in any event within one
hundred twenty (120) days after the end of each Fiscal Year of the Borrowers,
the audited consolidating and consolidated balance sheets of the Borrowers as at
the end of such Fiscal Year, and the related audited consolidating and
consolidated statements of income, retained earnings and cash flows of the
Borrowers for such Fiscal Year, setting forth in comparative form the figures
for the previous Fiscal Year, all in reasonable detail and certified to be true,
accurate and complete in all material respects by the Financial Officer of
Res-Care, for itself and as agent for the other Borrowers, and accompanied by
the opinion thereon of independent certified public accountants selected by the
Borrowers and reasonably acceptable to the Banks, which opinion shall be in a
form generally recognized as unqualified and shall state that such financial
statements have been prepared in accordance with GAAP applied on a basis
consistent with that of the preceding Fiscal Year, as applicable (except for
such changes, if any, as shall be specified and approved by such accountants in
such opinion) and that the audit by such accountants in connection with such
financial statements has been made in accordance with GAAP relating to auditing;
(ii) As soon as reasonably possible, and in any event within
thirty (30) days after the end of each month, an unaudited consolidated balance
sheet of Res-Care and its Consolidated Subsidiaries as at the end of such month,
and related unaudited divisional and consolidated statements of income, retained
earnings and cash flows of Res-Care and its Consolidated Subsidiaries on a
consolidated basis in accordance with GAAP for such month, compared to budget,
all in reasonable detail, prepared in accordance with GAAP consistently applied
and certified to be true, accurate and complete in all material respects by the
Financial Officer of Res-Care, for itself and as agent for the other Borrowers;
(iii) Together with the delivery to the Administrative Bank of
the financial statements referred to in subparts (i) and (ii) above, Res-Care,
for itself and as agent for the other Borrowers, shall deliver to the
Administrative Bank a Compliance Certificate (i) stating
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that the Authorized Officer of Res-Care, for itself and as agent for the other
Borrowers, signing the Compliance Certificate has reviewed the relevant terms of
this Loan Agreement, the Revolving Credit Notes, the Swing Line Note, the Stock
Pledge Agreement and the other Loan Instruments to which the Borrowers are
party, and such Authorized Officer has no actual knowledge (after making such
inquiry as is consistent with the scope of his or her duties) of any event or
condition which constitutes an Event of Default hereunder, or, if any such
condition or event existed or exists, specifying the nature and period of
existence thereof and what action the Borrowers have taken or are taking or
propose to take with respect thereto, and (ii) demonstrating in reasonable
detail compliance at the end of such accounting period with Sections 8.6 through
8.9 of this Loan Agreement to the extent applicable to such period;
(iv) Forthwith upon any Authorized Officer of Res-Care obtaining
knowledge of, or receiving notice of any claim of or action taken with respect
to, any condition or event which constitutes a Potential Default or an Event of
Default hereunder, a certificate specifying the nature and period of existence
thereof and what action the Borrowers have taken or are taking or propose to
take with respect thereto;
(v) Promptly upon receipt thereof, copies of any reports
(including management letters, if any) submitted to the Borrowers by independent
certified public accountants in connection with the examination of the financial
statements of the Borrowers made by such accountants;
(vi) With reasonable promptness after the preparation thereof, a
3 year strategic plan containing budgets and forecasts of the Borrowers; and
(vii) With reasonable promptness, such other information and data
with respect to the Borrowers as from time to time may be reasonably requested
by the Banks.
The Banks shall keep confidential all of the financial statements and
other information furnished to the Banks pursuant to this Loan Agreement, except
that each Bank shall have the right to furnish copies of such financial
statements and other information furnished to such Bank to financial
institutions which purchase interests in the Revolving Credit Facility pursuant
to Section 12 hereof and governmental agencies having jurisdiction over such
Bank and which request copies of such financial statements and/or other
information. Such Bank will promptly inform the Borrowers each time such Bank is
obligated or required to deliver any such financial statements and other
information to any such governmental agency having jurisdiction over such Bank.
7.4 Financial Records; Inspection.
A. System of Accountants. The Borrowers will maintain a system of
accounting established and administered in accordance with GAAP consistently
applied, and will set aside on their books all such proper reserves as shall be
required by GAAP.
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B. Access to Books and Records. The Borrowers will permit any
authorized representative designated by any Bank to inspect any of the
properties of the Borrowers, including their books of account (and to make
copies thereof and to take extracts therefrom), and to discuss their affairs,
finances and accounts with their officers and with their independent
accountants, all at such reasonable times and as often as may be reasonably
requested. Such inspection shall be for the information and benefit of the Banks
and, unless otherwise publicly available, any information obtained thereby or
otherwise pursuant thereto shall not be divulged to others except in connection
with the enforcement of the rights of the Banks upon the occurrence of an Event
of Default hereunder or to financial institutions which purchase interests in
the Revolving Credit Facility pursuant to Section 12 hereof and except as may be
required by law or by any governmental agency having jurisdiction over any Bank.
Each Bank will promptly inform the Borrowers each time such Bank is obligated or
required to deliver any such information to any governmental agency having
jurisdiction over such Bank.
7.5 Permits, Certificates, Leases, Licenses. The Borrowers will obtain,
maintain and comply at all times with all permits, certificates, licenses,
approvals, authorizations, leases and other instruments necessary or appropriate
for the conduct of their businesses as presently conducted or as contemplated to
be conducted in the future.
7.6 Notice. The Borrowers will notify the Banks in writing, within no
more than ten (10) calendar days (and without the benefit of any grace period
afforded in any provision of this Loan Agreement or the other Loan Instruments)
after any Authorized Officer of Res-Care learns of any of the following: (i) the
existence or occurrence of any Event of Default under this Loan Agreement, (ii)
that any representation or warranty made herein or in any other Loan Instrument
shall, for any reason, not be or shall cease in any material respect to be true
and complete and not misleading, (iii) the institution of, or adverse
determination in, any arbitration proceeding, including, without limitation, an
audit or examination by the Internal Revenue Service, involving the Borrowers
and describing the nature thereof, what happened with respect thereto and what
steps are being taken by the Borrowers with respect thereto, or (iv) the
institution of, or adverse determination in, any litigation involving a claim
against the Borrowers in excess of the sum of Five Hundred Thousand Dollars
($500,000.00) not covered by applicable insurance, describing the nature
thereof, what happened with respect thereto, and what steps are being taken by
the Borrowers with respect thereto.
7.7 Payment of Obligations. The Borrowers will pay the Revolving Credit
Notes, the Swing Line Note and the other Obligations timely in accordance with
their respective terms in legal tender of the United States of America. All
payments on the Revolving Credit Notes, the Swing Line Note and the other
Obligations shall be made to the Banks, respectively, in "good and collected
funds," at the principal office of the Administrative Bank or PNC, as
applicable, not later than 11:00 A.M., Louisville, Kentucky time, on the date
due; funds received by the Administrative Bank or PNC, as applicable, after that
hour shall be deemed to have been received on the next following Business Day.
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7.8 Environmental Matters. The Borrowers hereby warrant that, to the
best of their knowledge, the Borrowers' assets are now and so long as the
Revolving Credit Facility, the Swing Line Loans, and the Letters of Credit
continue in effect will remain materially free of contamination by hazardous,
dangerous, contaminating, noxious or unsafe materials. Subject to the right of
the Borrowers to contest any alleged violation of any environmental law,
regulation and requirement in good faith and with due diligence, and provided
that no such contesting will result in the loss or forfeiture of any assets of
the Borrowers or otherwise have a material adverse effect on the financial
condition of the Borrowers, the Borrowers further covenant to comply with all
applicable environmental laws, regulations and requirements, and the Borrowers
covenant and agree to remedy any violation of any environmental law, regulation
and requirement, promptly upon the Borrowers' learning of such violation. The
Borrowers further hereby agree to indemnify and hold the Banks harmless from any
expense, loss, claim, suit or fee arising out of any such contamination or
noncompliance or the Borrowers' breach of the provisions of this Section 7.8.
7.9 Accounts. The Borrowers will maintain their primary depository
account and their primary cash management account with PNC.
7.10 Consolidated Subsidiaries and Interests in Persons that are not
Consolidated Subsidiaries. Res-Care shall promptly notify the Administrative
Bank in writing of each new Consolidated Subsidiary hereafter created or
acquired by Res-Care or a Consolidated Subsidiary and each acquisition by
Res-Care or a Consolidated Subsidiary of interests in a Person that will not
treated be as a Consolidated Subsidiary of Res-Care subsequent to such
acquisition of interests.
Unless the requirement to do so is waived in writing by the
Administrative Bank, within nine (9) days after the advance of any moneys by
Res-Care or another Borrower to or for the benefit of a New Consolidated
Subsidiary, Res-Care (i) shall cause each such new Consolidated Subsidiary of
Res-Care to execute and deliver to the Administrative Bank for the benefit of
the Banks (a) an Assumption Agreement in the form of Exhibit M hereto, (b) a
Security Agreement in the form of Exhibit K hereto, (c) UCC-1 financing
statement(s) in the form of Exhibit L hereto for filing in the Commonwealth of
Kentucky, the state of Delaware and the state(s) in which the Consolidated
Subsidiary has assets or operations, (d) a borrowing resolution of the
Consolidated Subsidiary and (e) copies of the Articles of Incorporation or
Certificate of Incorporation, as applicable, and Bylaws of the Consolidated
Subsidiary, all in form and substance satisfactory to the Administrative Bank,
and (ii) shall pledge all of the issued and outstanding shares of stock of such
Consolidated Subsidiary owned by Res-Care or a Consolidated Subsidiary of
Res-Care to the Administrative Bank for the benefit of the Banks by (a)
executing and delivering an Amendment to Stock Pledge Agreement, in the form of
Exhibit N hereto and (b) delivering the share certificates in the Consolidated
Subsidiary to the Administrative Bank. At such times as may be required by the
Administrative Bank, Res-Care shall cause any new Consolidated Subsidiary and
the existing Consolidated Subsidiaries to execute amendment(s) to this
Agreement, the Revolving Credit Notes, the Swing Line Note, to reflect the
addition of the new Consolidated
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Subsidiaries. The Borrowers shall cause all existing and future Consolidated
Subsidiaries to observe and perform the covenants set forth in Sections 7 and 8
of this Loan Agreement.
Unless the requirement to do so is waived in writing by the
Administrative Bank, within nine (9) days after the advance of any moneys by
Res-Care or another Borrower to or for the benefit of a Person that will not
treated be as a Consolidated Subsidiary of Res-Care subsequent to an acquisition
of interests in such Person, Res-Care shall cause itself or the Consolidated
Subsidiary acquiring the interests, as applicable, to pledge all of the issued
and outstanding shares of stock, partnership interests, limited partnership
interests, limited liability company interests or other interests of such Person
acquired by Res-Care or such Consolidated Subsidiary to the Administrative Bank,
for the benefit of the Banks, by (a) executing and delivering a Stock Pledge
Agreement, in the form of Exhibit O hereto and (b) (1), if the acquired
interests are represented by certificated shares, by delivering the share
certificates to the Administrative Bank or (2), if the acquired interests are
not represented by certificated shares, by causing the security interest of the
Administrative Bank to be recorded in the records of the partnership, limited
partnership or limited liability company, as applicable.
SECTION 8
NEGATIVE COVENANTS
The Borrowers hereby covenant and agree that until the Revolving Credit
Notes and the other Obligations have been respectively paid in full to the
Banks, the Swing Line Note has been paid in full to PNC, the Revolving Credit
Facility has been terminated by the Banks or the Borrowers, the Swing Line
Credit Facility has been terminated by the Administrative Bank or the Borrowers,
and the Letter of Credit Subfacility has been terminated by PNC or the
Borrowers, the Borrowers will perform and observe all of the following
provisions:
8.1 Mergers and Other Extraordinary Events. The Borrowers will not,
without the prior written consent of the Banks in every specified instance:
(i) Except for Permitted Business Combinations that meet the
requirements of Section 8.11 hereof, be or become a party to any consolidation,
reorganization (including, without limitation, the types referred to in Section
368 of the Internal Revenue Code of 1986, as amended) merger or
recapitalization; or
(ii) Sell, lease, assign, transfer or dispose of or suffer the
non-insurable loss of ten percent (10%) or more of the fair market value of
their properties or assets on a consolidated basis in accordance with GAAP in
any period of twelve (12) consecutive months, other than if such assets or
properties are replaced promptly by assets or properties of comparable utility
to the Borrowers.
8.2 Indebtedness, etc. The Borrowers will not, without the prior written
consent of the Banks, directly or indirectly, create, incur, assume, guarantee,
agree to purchase or
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repurchase or provide funds in respect of, or otherwise become liable with
respect to any Indebtedness other than:
(i) The Revolving Credit Facility;
(ii) The Swing Line Credit Facility;
(iii) The Equipment Leases in the aggregate amount not exceeding
$1,500,000;
(iv) The ▇▇▇▇▇▇▇ Note;
(v) Current liabilities of the Borrowers (other than for borrowed
money) incurred in the ordinary course of their businesses and in accordance
with customary trade practices;
(vi) Purchase money indebtedness incurred or assumed by the
Borrowers in connection with acquisition of tangible and intangible personal and
real property, to the extent such tangible and intangible personal and real
property are to be used by the Borrowers in businesses permitted under Section
8.5 hereof; provided that the aggregate amount of all purchase money
indebtedness incurred under this Section 8.2(vi) and the aggregate amount of all
purchase money indebtedness incurred under Section 8.4(vii) hereof, excluding
the ▇▇▇▇▇▇▇ Note, shall not exceed Five Million Dollars ($5,000,000); and
(vii) The advances, loans and guarantees permitted under Section
8.12 hereof.
8.3 Use of Assets. The Borrowers will not use, or cause or permit the
use of, any of their assets in any manner prohibited by law, governmental
regulations or applicable insurance policies.
8.4 Mortgages, Liens, Encumbrances, Security Interests, etc. The
Borrowers will not, without the prior written consent of the Banks, directly or
indirectly create, incur, assume or permit to continue in existence any
mortgage, lien, charge or encumbrance on, or security interest in, or pledge or
deposit of, or conditional sale or other title retention agreement (including
any lease which in accordance with GAAP would constitute Indebtedness) with
respect to, any property or asset now owned or hereafter acquired by the
Borrowers, provided that the restrictions in this Section 8.4 shall not
prohibit:
(i) Liens and security interests granted to the Banks pursuant to
the Security Agreements;
(ii) Liens for taxes, assessments or governmental charges the
payment of which is not at the time required for the reasons set forth by the
proviso to the first sentence of Section 7.2A;
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(iii) Statutory liens of landlords and liens of carriers,
warehousemen, mechanics, contractors and materialmen incurred in the ordinary
course of business for sums not yet due or being contested in good faith and by
appropriate proceedings promptly initiated and diligently conducted, if such
reserve or other appropriate provision, if any, as shall be required by GAAP
shall have been made therefor;
(iv) Liens incurred or deposits made in the ordinary course of
business in connection with worker's compensation, unemployment insurance and
other types of social security or to secure the performance of tenders,
statutory obligations, surety and appeal bonds, bids, leases, performance and
return of money bonds and other similar obligations (exclusive of obligations
for the payment of borrowed money) for sums not yet due or being contested in
good faith and by appropriate proceedings promptly initiated and diligently
conducted, if such reserve or other appropriate provision, if any, as shall be
required by GAAP shall have been made therefor;
(v) Liens, charges, encumbrances and priority claims which (a)
are incidental to the conduct of the businesses of the Borrowers and the
ownership of their properties and assets, (b) were not incurred in connection
with the borrowing of money or the obtaining of advances of credit, and (c) do
not in the aggregate materially detract from the value of the property of the
Borrowers or materially impair the use thereof in the operation of their
businesses;
(vi) Liens created under operating leases and capital leases
entered into or assumed by the Borrowers in the ordinary course of business for
fair and adequate consideration, to the extent such liens only secure the
performance by the Borrowers of their obligations under such operating leases
and capital leases;
(vii) Subject to the provisions of Section 8.11 hereof, purchase
money security interests; provided that each such purchase money security
interest shall only encumber the assets acquired by the Borrowers with the
proceeds of the Indebtedness secured by such purchase money security interest,
and each such purchase money security interest shall not secure more than 100%
of the Indebtedness incurred by the Borrowers in connection with the acquisition
of the assets encumbered by such purchase money security interest; provided
further that the aggregate amount of all purchase money indebtedness incurred
under Section 8.2(vi) hereof and the aggregate amount of all purchase money
indebtedness incurred under this Section 8.4(vii), excluding the ▇▇▇▇▇▇▇ Note,
shall not exceed Five Million Dollars ($5,000,000); and
(viii) Mortgage liens and security interests assumed by the
Borrowers in connection with any Permitted Business Combination of the type
described in Section 8.11 hereof which are hereafter made by the Borrowers, or
which the Borrowers otherwise takes subject to as part of any such Permitted
Business Combination, provided that no such lien or security interest shall
secure Indebtedness in an amount which exceeds the fair market value of the
assets acquired by the Borrowers in connection with any such Permitted Business
Combination;
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(ix) The existing liens and security interests identified on
Schedule 8.4 annexed hereto; and
(x) Mortgage liens and security interests securing indebtedness
of a Subsidiary to a Borrower.
Further, no Borrowers will grant to any Person other than the Administrative
Bank, for the benefit of the Banks, a negative pledge on such Borrower's assets.
8.5 Nature of Businesses. The Borrowers will not, without the prior
written consent of the Banks in every specified instance, engage in any
businesses other than (i) providing residential, vocational and other training,
education, support and related programs and services (including habilitation,
rehabilitation and required medical services) to (a) persons with developmental
and other neurological disabilities (including individuals with mental
retardation, dual diagnosis, acquired brain injury and other special needs), and
(b) at-risk youth, juveniles and others (including individuals who are
adjudicated or court-referred), in a variety of settings, ranging from single
placements to large congregate settings, some of which may be secured, or
pursuant to management or operating agreements with other parties, and (ii) all
businesses incidental thereto.
8.6 Current Ratio. Res-Care and its Subsidiaries on a consolidated basis
in accordance with GAAP shall not permit the Current Ratio to be less than 1.25
to 1.0 at any time.
8.7 Minimum Net Worth. Res-Care and its Subsidiaries on a consolidated
basis in accordance with GAAP will not permit their Net Worth:
(i) With respect to each Fiscal Quarter ending subsequent to the
Closing Date, to be less than the higher of (a) $51,000,000 or (b) the minimum
Net Worth required of the Borrowers as of the immediately preceding Fiscal
Quarter and plus the sum of (x) 75% of Net Income for the Fiscal Quarter then
ended, (y) 100% of all proceeds (net of underwriters' discount and other
customary and usual closing costs) realized by Res-Care from the private
placement and/or public offering of any shares of its stock during the Fiscal
Quarter then ended, and (z) 100% of all additions to Res-Care's stockholders'
equity resulting from the issuance by Res-Care of its capital stock to pay in
whole or in part the purchase price of Facilities acquired by the Borrowers
during the Fiscal Quarter then ended.
For purposes of this Section 8.7, any net losses hereafter incurred by
the Borrowers will not reduce the amount of the minimum Net Worth required to be
maintained by the Borrowers pursuant to this Section 8.7.
8.8 Fixed Charge Coverage Ratio. The Borrowers shall not permit, for any
rolling four (4) consecutive Fiscal Quarter period, the Fixed Charge Coverage
Ratio for such rolling four (4) consecutive Fiscal Quarter period to be less
than 1.75 to 1.0.
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8.9 Ratio of Indebtedness to Cash Flow from Operations. The Borrowers
shall not permit, for any rolling four (4) consecutive Fiscal Quarter period,
the ratio of Indebtedness as of the end of such rolling four (4) consecutive
Fiscal Quarter period to Cash Flow from Operations for such rolling four (4)
consecutive Fiscal Quarter period to exceed 3.5 to 1.0.
8.10 Payment of Dividends. Res-Care shall not pay any dividends to its
shareholders if an Event of Default has occurred and is continuing or if the
payment of dividends would result in the Borrowers ceasing to be in compliance
with the financial covenants set forth in Sections 8.6 through 8.9 of this Loan
Agreement.
8.11 Permitted Business Combinations. Res-Care and its Subsidiaries
shall not, without the prior written consent of the Banks, engage in any
Business Combination unless all of the following conditions are met, in which
case the proposed Business Combination shall be deemed a "Permitted Business
Combination":
(i) the Business Combination shall be with a Person that
is engaged in a business of the type described in Section 8.5 hereof;
(ii) the Business Combination shall be accomplished
through consensual (non-hostile) agreement with the seller;
(iii) the Business Combination shall result in Res-Care
being the surviving entity such that it reports the results of the acquisition
on a consolidated basis in accordance with GAAP or the equity basis of
accounting in accordance with GAAP;
(iv) the Business Combination Consideration associated
with the proposed Business Combination plus the aggregate Business Combination
Consideration associated with Permitted Business Combinations that have been
completed in the current Fiscal Year does not exceed Thirty Five Million Dollars
($35,000,000);
(v) the Business Combination Consideration associated with
the proposed Business Combination does not exceed Seven Million Five Hundred
Thousand Dollars ($7,500,000)(except for the acquisition of certain interests by
RCP and RSCRP to occur on or after the Closing Date as contemplated in the
Exchange Agreement dated December 9, 1996);
(vi) if the Business Combination involves acquisition of
interests in a Person that will not treated be as a Consolidated Subsidiary of
Res-Care subsequent to the Business Combination, the aggregate amount of
Business Combination Consideration associated with all such Business
Combinations in any Fiscal Year cannot exceed Three Million Dollars
($3,000,000); and
(vii) the Borrowers shall have provided the Administrative
Bank with a Compliance Certificate, substantially in the form of Exhibit G
hereto, demonstrating to the reasonable satisfaction of the Banks that the
proposed Business Combination does not cause
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the Borrowers, on a consolidated pro forma basis, to violate any of the
financial covenants set forth in Sections 8.6 through 8.9 of this Loan
Agreement.
8.12 Loans, Advances and Guaranties by Borrowers. Without the prior
written consent of the Banks, no Borrower will make loans or capital
contributions, or guaranty the repayment of obligations of another Person, or
otherwise become liable in any respect to the obligations and liabilities of
another Person in an aggregate amount exceeding One Million Five Hundred
Thousand Dollars ($1,500,000.00), except for the following:
(i) loans and advances from one Borrower to a Subsidiary; and
(ii) endorsement of instruments or items of payment in the
ordinary course of business.
Provided, any Borrower may, without violating the provisions of this Section
8.12, assume or guarantee minimum working capital obligations of owners and/or
lessees of Facilities which such Borrower has been engaged to manage under duly
executed management agreements, but only to the extent such Borrower has been
granted a perfected security interest in or otherwise has valid and effective
control over the accounts receivable arising in respect of services furnished to
the occupants of such Facilities and to the extent that all such assumptions and
guarantees by Borrowers in the aggregate do not exceed Seven Million Five
Hundred Thousand Dollars ($7,500,000). The Borrowers agree that all existing
security interests granted to any Borrower in the accounts receivable of owners
of Facilities which such Borrower manages, to the extent the same have been
previously assigned to PNC, shall continue to be assigned to the Administrative
Bank to secure the payment of the Obligations. The Borrowers further covenant
and agree that, (a) to the extent any Borrower in its sole discretion elects to
hereafter acquire perfected security interests in the accounts receivable of
owners of Facilities which such Borrower now or hereafter manages, such Borrower
will assign of record all such security interests to the Administrative Bank to
secure the payment of the obligations, and (b) such Borrower will assign of
record to the Administrative Bank, to secure the payment of the Obligations, the
perfected security interest in the accounts receivable of Salem Village MRDD,
Inc. granted to the Borrower.
8.13 Interest Rate Agreements. The Borrowers will not, and will not
permit any Subsidiary to, enter into any Interest Rate Agreement unless (i) such
Interest Rate Agreement is intended to fix or establish a maximum interest rate
in respect of Indebtedness with a notional amount not in excess of the Revolving
Loan Commitments and is embodied in a standard ISDA form of agreement which is
acceptable to the Banks with respect to any intercreditor issues, (ii) the
counterparty is a lender or another financial institution acceptable to the
Banks, and (iii) the Borrower promptly provides a true and complete copy of such
Interest Rate Agreement to the Administrative Bank, on behalf of itself and the
Banks. At or following the effective date of any such Interest Rate Agreement,
the Administrative Bank may, upon written notification to the Borrowers and the
Banks and such counterparty, designate (which designation shall be made only
upon the instructions or with the consent of the Majority Banks) the credit
exposure of such counterparty under such Interest Rate
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Agreement as an obligation entitled to share, pari passu with the Obligations,
in respect to the benefits provided by the collateral under the Security
Agreements, in accordance with the applicable provisions of the Security
Agreements, and if the Administrative Bank so designates such credit exposure,
the applicable Interest Rate Agreement of such counterparty shall be considered
a "Designated Interest Rate Agreement".
SECTION 9
EVENTS OF DEFAULT; ACCELERATION
The following events shall constitute Events of Default under this Loan
Agreement:
(i) The failure by the Borrowers to pay any interest on and/or
any principal of any Revolving Credit Note when the same becomes due and payable
or within five (5) days thereafter; or
(ii) The failure by the Borrowers to reimburse PNC upon demand
for any draft honored by PNC under any Letter of Credit now or hereafter issued
by PNC for the account of the Borrowers; or
(iii) The failure by the Borrowers to pay any interest on and/or
any principal of the Swing Line Note when the same becomes due and payable or
within five (5) days thereafter; or
(iv) The failure by the Borrowers to pay any rent or other
amounts under any Equipment Lease when due or within any grace period provided
therein for the payment of the same; or
(v) The failure by the Borrowers to perform or observe any of the
provisions of Sections 8.2, 8.3, 8.5, 8.6, 8.7, 8.8 or 8.9 hereof, and such
default continues for thirty (30) days after written notice of such default
shall have been delivered to the Borrowers; or
(vi) The failure by the Borrowers to perform or observe any of
the provisions of Sections 7.10, 8.1, 8.4, 8.10, 8.11, or 8.12; or
(vii) The Borrowers shall default in the performance of or
compliance with any covenant, obligation or provision contained in this Loan
Agreement (other than those referred to above in this Section 9), and any such
default shall not have been remedied (i) within thirty (30) days after written
notice of such default shall have been delivered to the Borrowers, or (ii) if
such default cannot be cured within such thirty (30) day period, within sixty
(60) days after written notice of such default shall have been delivered to the
Borrowers, provided that the Borrowers commence to cure the particular default
within such
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thirty (30) day period and prosecutes the cure to completion with due diligence
within such sixty (60) day period; or
(viii) If any material representation or warranty made in writing
by or on behalf of the Borrowers herein or pursuant hereto or otherwise in
connection with the Revolving Credit Facility, the Swing Line Credit Facility,
and/or the Letter of Credit Subfacility shall have been materially false or
misleading or incorrect when made and the Authorized Officer of Res-Care on
behalf of itself and the other Borrowers knew or should have known of the
falsity, misleading nature of or incorrectness of such representation or
warranty when it was made, and the Borrowers fail to cause such representation
or warranty to cease to be materially false, misleading or incorrect within
thirty (30) days after written notice of such materially false, misleading or
incorrect representation or warranty shall have been delivered to the Borrowers;
or
(ix) The failure of the Borrowers to pay any of their other
Indebtedness, not otherwise referred to in this Section 9, and which in the
aggregate exceeds Fifty Thousand Dollars ($50,000.00) to any one Person, when
due or within any grace period afforded the Borrowers for paying the same, or
the acceleration of the maturity of any such Indebtedness by the holder thereof,
other than any such Indebtedness with respect to which the Borrowers are
contesting in good faith the validity, amount and/or the Borrowers' liability
therefor and for which adequate reserves have been established on the books of
the Borrowers in accordance with GAAP; or
(x) If the Borrowers shall discontinue their businesses (except
for the discontinuation of business by a Borrower whose business is combined
with that of one or more other Borrowers, whether by merger, transfer of assets,
etc.) or shall make an assignment for the benefit of creditors, or shall fail
generally to pay their debts as such debts become due, or shall apply for or
consent to the appointment of or taking possession by a trustee, receiver or
liquidator (or other similar official) of any substantial part of their
property, or shall commence a case or have an order for relief entered against
it under the federal bankruptcy laws, as now or hereafter constituted, or any
other applicable federal or state bankruptcy, insolvency or other similar law,
or if the Borrowers or the shareholders of the Borrowers shall take any action
in furtherance of the dissolution or liquidation of the Borrowers; or
(xi) If, within thirty (30) days after the commencement against
the Borrowers of a case under the federal bankruptcy laws, as now or hereafter
constituted, or any other applicable federal or state bankruptcy, insolvency or
other similar law, such case shall have been consented to or shall not have been
dismissed or all orders or proceedings thereunder affecting the operations or
the businesses of the Borrowers shall not have been stayed, or if the stay of
any such order or proceeding shall thereafter be set aside, or if within sixty
(60) days after the entry of a decree appointing a trustee, receiver or
liquidator (or other similar official) of any substantial part of the property
of the Borrowers, such appointment shall not have been vacated; or
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(xii) If a final uninsured judgment shall be rendered against any
of the Borrowers which causes the Borrowers to be in breach of any of the
covenants set forth in Sections 8.6 through 8.10 hereof and (i) if, prior to the
availability of any execution thereon, such judgment shall not have been
discharged or execution thereof shall not have been stayed pending appeal, or
if, after the expiration of any such stay, such judgment shall not have been
discharged, or (ii) the Borrowers shall not have established adequate reserves
on their books in respect of such final uninsurable judgment or judgments; or
(xiii) In the event Res-Care experiences a Change in Control
without the prior written consent of the Banks.
Upon the occurrence of any Event of Default described in clauses (xi) or (xii)
of this Section 9 with respect to the Borrowers, the unpaid principal balance of
each of the Revolving Credit Notes, the Swing Line Note and the other
Obligations, together with all accrued interest thereon, shall automatically
become immediately due and payable, without presentment, demand, protest or
other requirements of any kind, all of which are hereby expressly waived by the
Borrowers. Upon the occurrence of any other Event of Default referred to in this
Section 9, the Banks may at any time at their option, by written notice to the
Borrowers, declare the unpaid principal balance of and all accrued and unpaid
interest on each of the Revolving Credit Notes, the Swing Line Note and the
other Obligations to be immediately due and payable in full to the Banks, as
applicable, without presentment, demand, protest or other requirements of any
kind, all of which are hereby waived by the Borrowers.
SECTION 10
REMEDIES UPON DEFAULT, ETC.
10.1 Defaults. Upon the occurrence and during the continuation of any
Event of Default, the Banks may proceed to protect and enforce their rights by
an action at law, suit in equity or other appropriate proceeding, whether for
the specific performance of any agreement contained herein or in the Revolving
Credit Notes or the Swing Line Note or for an injunction against a violation of
any of the terms hereof or thereof, or in aid of the exercise of any right,
power or remedy granted hereby or thereby or by law or pursuant to the other
Loan Instruments. In case of a default in the payment of any principal of or
interest on the Revolving Credit Notes, the Swing Line Note and/or the other
obligations, or upon acceleration thereof, the Borrowers will pay to the Banks
such further amount as shall be sufficient to cover the reasonable costs and
expenses of collection thereof, including (to the extent permitted by law),
without limitation, reasonable attorneys' fees, expenses and disbursements.
10.2 Offset. If any Event of Default shall occur and be continuing and
regardless of whether or not the Banks have accelerated the maturity date of the
Revolving Credit Notes, the Swing Line Note and/or the other Obligations, each
Bank shall have the right then, or at any time thereafter, to set off against
any and all deposit balances and other sums and Indebtedness and other property
then held or owned by such Bank to or for the credit or
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account of the Borrowers, all without notice to or demand upon the Borrowers or
any other Person, all such notices and demands being hereby expressly waived by
the Borrowers.
10.3 Rights Cumulative. All of the rights and remedies of the Banks upon
the occurrence of an Event of Default hereunder shall be cumulative to the
greatest extent permitted by law, and shall be in addition to all those rights
and remedies afforded the Banks at law or in equity.
10.4 Payment of Costs and Expenses. All of the reasonable costs,
expenses, damages and liabilities, including, without limitation, all reasonable
attorneys' fees, incurred by and imposed upon any Bank with respect to, in
connection with the enforcement of this Loan Agreement or any other Loan
Instrument or collection of amounts due hereunder or thereunder or the proof and
allowability of any claim arising under this Loan Agreement or any other Loan
Instrument, whether in bankruptcy or receivership proceedings or otherwise, and
in any workout or restructuring or in connection with the protection,
preservation, exercise or enforcement of any of the terms hereof or of any
rights hereunder or under any other Loan Instrument or in connection with any
foreclosure, collection or bankruptcy proceedings, in connection with or as a
result of any action taken or omitted to be taken pursuant to this Loan
Agreement, the Revolving Credit Notes, the Swing Line Note or the other Loan
Instruments shall be paid by, and shall be the sole responsibility of, the
Borrowers.
SECTION 11
THE ADMINISTRATIVE BANK
11.1 Appointment. Each Bank hereby irrevocably designates, appoints and
authorizes PNC to act as the Administrative Bank under this Loan Agreement and
to execute and deliver or accept on behalf of each of the Banks the other Loan
Instruments. Each Bank hereby irrevocably authorizes, and each holder of any
Revolving Credit Note by the acceptance of such Revolving Credit Note shall be
deemed irrevocably to authorize, the Administrative Bank to take such action on
behalf of such Bank and such holder under the provisions of this Loan Agreement
and the other Loan Instruments and any other instruments and agreements referred
to herein, and to exercise such powers and to perform such duties hereunder as
are specifically delegated to or required of the Administrative Bank by the
terms hereof, together with such powers as are reasonably incidental thereto.
PNC agrees to act as the Administrative Bank to the extent provided in this Loan
Agreement.
11.2 Delegation of Duties. The Administrative Bank may perform any of
its duties hereunder by or through agents or employees (provided such delegation
is exercised with reasonable care and does not constitute a relinquishment of
its duties as Administrative Bank) and, subject to Sections 11.5, 11.6 and 11.7
hereof, shall be entitled to engage and pay for the advice or services of any
attorneys, accountants or other experts concerning all matters pertaining to its
duties hereunder and to rely upon any advice so obtained, provided reasonable
care is used in the selection of the foregoing experts.
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11.3 Nature of Duties; Independent Credit Investigation. The
Administrative Bank shall have no duties or responsibilities except those
expressly set forth in this Loan Agreement and the other Loan Instruments and no
implied covenants, functions, responsibilities, duties, obligations or
liabilities shall be read into this Loan Agreement or shall otherwise exist. The
duties of the Administrative Bank shall be mechanical and administrative in
nature and shall include the duty to provide to each Bank an executed original
of such Bank's Revolving Credit Note and an executed original of this Loan
Agreement and a copy of the other Loan Instruments; the Administrative Bank
shall not have by reason of this Loan Agreement a fiduciary or trust
relationship in respect of any Bank; and nothing in this Loan Agreement,
expressed or implied, is intended to or shall be so construed as to impose upon
the Administrative Bank any obligations in respect of this Loan Agreement except
as expressly set forth herein. Each Bank expressly acknowledges (i) that the
Administrative Bank has not made any representations or warranties to it and
that no act which the Administrative Bank hereafter takes, including any review
of the affairs of the Borrowers, shall be deemed to constitute any
representation or warranty by the Administrative Bank to any Bank; (ii) that it
has made and will continue to make, without reliance upon the Administrative
Bank, its own independent investigation of the financial condition and affairs
and its own appraisal of the creditworthiness of the Borrowers in connection
with this Loan Agreement and the making and continuance of the Revolving Credit
Loans hereunder; and (iii) except as expressly provided herein, that the
Administrative Bank shall have no duty or responsibility, either initially or on
a continuing basis, to provide any Bank with any credit or other information
with respect thereto, whether coming into its possession before the making of
any Revolving Credit Loan or at any time or times thereafter.
11.4 Actions in Discretion of the Administrative Bank: Instructions from
the Banks. The Administrative Bank agrees, upon the written request of the
Banks, to take or refrain from taking any action of the type specified as being
within the Administrative Bank's rights, powers or discretion herein; provided
that the Administrative Bank shall not be required to take any action which
exposes the Administrative Bank to legal liability or which is contrary to this
Loan Agreement or any other Loan Instrument or applicable law. In the absence of
a request by the Banks, the Administrative Bank shall have authority, in its
sole discretion, to take or not to take any such action, unless this Loan
Agreement specifically requires the consent of the Banks. Any action taken or
failure to act pursuant to such instructions or discretion shall be binding on
the Banks, subject to the provisions of Section 11.6 hereof. Subject to the
provisions of Section 11.6 hereof, no Bank shall have any right of action
whatsoever against the Administrative Bank as a result of the Administrative
Bank acting or refraining from acting hereunder in accordance with the
instructions of the Banks or, in the absence of such instructions, in the
absolute discretion of the Administrative Bank.
11.5 Reimbursement and Indemnification of the Administrative Bank and
the Banks by the Borrowers. The Borrowers unconditionally agree to pay or
reimburse the Administrative Bank and hold the Administrative Bank harmless
against liability for the payment of all reasonable and necessary out-of-pocket
costs, expenses and disbursements for which reimbursement is customarily
obtained, including fees and expenses of counsel and
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consultants incurred by the Administrative Bank (a) in connection with the
preparation, negotiation, printing, execution, administration, interpretation
and performance of this Loan Agreement and the other Loan Instruments and (b)
relating to any requested amendments, waivers or consents pursuant to the
provisions hereof. The Borrowers unconditionally agree to pay or reimburse the
Administrative Bank and hold each Bank harmless against all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind or nature whatsoever which may be imposed
on, incurred by or asserted against the Administrative Bank and/or any Bank, in
its capacity as such, in any way relating to or arising out of this Loan
Agreement or any other Loan Instrument or any action taken or omitted by the
Administrative Bank and/or any Bank hereunder or thereunder; provided that the
Borrowers shall not be liable for any portion of such liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements (A) if the same results from the bad faith, gross negligence or
willful misconduct of the Administrative Bank or any Bank, or (B) if the
Borrowers were not given notice of the subject claim and the opportunity to
participate in the defense thereof, at its expense, or (C) if the same results
from a compromise or settlement agreement entered into without the consent of
the Borrowers, which consent shall not be unreasonably withheld.
11.6 Exculpatory Provisions. Neither the Administrative Bank nor any of
its directors, officers, employees, agents or affiliates shall (i) be liable to
any Bank for any action taken or omitted to be taken by it or them hereunder, or
in connection herewith including pursuant to any other Loan Instruments, unless
caused by its or their own gross negligence or willful misconduct, (ii) be
responsible in any manner to any of the Banks for the effectiveness,
enforceability, genuineness, validity or the due execution of this Loan
Agreement or any other Loan Instrument or for any recital, representation,
warranty, document, certificate, report or statement herein or made or furnished
under or in connection with this Loan Agreement or any other Loan Instrument, or
(iii) be under any obligation to any of the Banks to ascertain or to inquire as
to the performance or observance of any of the terms, covenants or conditions
hereof or thereof on the part of the Borrowers, or the financial condition of
the Borrowers, or the existence or possible existence of any Event of Default or
Potential Default under the Loan Instruments. Neither the Administrative Bank
nor any Bank nor any of their respective directors, officers, employees, agents,
attorneys or affiliates shall be liable to the Borrowers or any other Person for
consequential damages resulting from any breach of contract, tort or other wrong
in connection with the negotiation, documentation or administration of the Loan
Instruments or the collection of the obligations.
11.7 Reimbursement and Indemnification of the Administrative Bank by the
Banks. Each Bank agrees to reimburse and indemnify the Administrative Bank (to
the extent not reimbursed by the Borrowers and without limiting the obligation
of the Borrowers to do so) in proportion to its Revolving Credit Facility Pro
Rata Share from and against all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind or nature whatsoever which may be imposed on, incurred by or asserted
against the Administrative Bank, in its capacity as such, in any way relating to
or arising out of this Loan Agreement or any other Loan Instrument or any action
taken or omitted by the Administrative Bank hereunder or thereunder, provided
that no such ▇▇▇▇-
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bursement shall be required with respect to expenses incurred by the
Administrative Bank during the time period through the Closing Date and no Bank
shall be liable for any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
(i) if the same relates to or arises out of the Administrative Bank's gross
negligence or willful misconduct, or (ii) if such Bank was not given notice of
the subject claim and the opportunity to participate in the defense thereof, at
its expense, or (iii) if the same results from a compromise and settlement
agreement entered into without the consent of the Bank, which consent shall not
be unreasonably withheld.
11.8 Reliance by the Administrative Bank. The Administrative Bank shall
be entitled to rely upon any writing, telegram, telex or teletype message,
facsimile, resolution, notice, consent, certificate, letter, cablegram,
statement, order or other document or conversation by telephone or otherwise
believed by it to be genuine and correct and to have been signed, sent or made
by the proper Person or Persons, and upon the advice and opinions of counsel and
other professional advisers selected by the Administrative Bank. The
Administrative Bank shall be fully justified in failing or refusing to take any
action hereunder unless it shall first be indemnified to its satisfaction by the
Banks in accordance with their respective Revolving Credit Facility Pro Rata
Shares against any and all liability and expense which may be incurred by it by
reason of taking or continuing to take any such action.
11.9 Notice of Default. The Administrative Bank shall not be deemed to
have knowledge or notice of the occurrence of any Potential Default or Event of
Default unless the Administrative Bank has received written notice from a Bank
or the Borrowers referring to this Loan Agreement, specifically describing such
Potential Default or Event of Default and stating that such notice is a "notice
of default."
11.10 The Banks in Their Individual Capacities. With respect to its
Revolving Loan Commitment, the Administrative Bank shall have the same rights
and powers hereunder as any other Bank and may exercise the same as though it
were not the Administrative Bank, and the term "Banks" shall, unless the context
otherwise indicates, include the Administrative Bank in its individual capacity.
Each Bank and its Affiliates may, without liability to account, except as
prohibited herein, make loans to, accept deposits from, discount drafts for, act
as trustee under indentures of, and generally engage in any kind of banking or
trust business with, Res-Care and its Affiliates, in the case of the
Administrative Bank, as though it were not acting as Administrative Bank
hereunder and in the case of each Bank, as though such Bank were not a Bank
hereunder.
11.11 Holders of Revolving Credit Notes. The Administrative Bank may
deem and treat any payee of any Revolving Credit Note as the owner thereof for
all purposes hereof unless and until written notice of the assignment or
transfer thereof shall have been filed with the Administrative Bank. Any
request, authority or consent of any Person who at the time of making such
request or giving such authority or consent is the holder of any Revolving
Credit Note shall be conclusive and binding on any subsequent holder, transferee
or assignee of such Revolving Credit Note or of any Revolving Credit Note issued
in exchange therefor.
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11.12 Equalization of the Banks. The Banks and the holders of any
participations in any Revolving Credit Notes agree among themselves that, with
respect to all amounts received by any Bank or any such holder for application
to any Revolving Credit Note or under any such participation, whether received
by voluntary payment, by realization upon security, by the exercise of the right
of setoff or banker's lien, by counterclaim or by any other non-pro rata source,
equitable adjustment will be made in the manner stated in the following sentence
so that, in effect, all such excess amounts will be shared ratably among the
Banks and such holders in proportion to their interests in payments under the
Revolving Credit Notes. The Banks or any such holder receiving any such amount
shall purchase for cash from each of the other Banks an interest in such Bank's
Revolving Credit Loans in such amount as shall result in a ratable participation
by the Banks and each holder in the aggregate unpaid amount under the Revolving
Credit Notes, provided that if all or any portion of such excess amount is
thereafter recovered from the Bank or the holder making such purchase, such
purchase shall be rescinded and the purchase price restored to the extent of
such recovery, together with interest or other amounts, if any, required by law
(including court order) to be paid by the Bank or the holder making such
purchase.
11.13 Successor Administrative Bank. The Administrative Bank may resign
as Administrative Bank with the consent of the Borrowers, such consent not to be
unreasonably withheld, upon not less than thirty (30) days prior written notice
given to the Borrowers and the other Bank(s). If the Administrative Bank shall
resign under this Loan Agreement, then either (i) the Banks shall appoint a
successor administrative bank, subject to the consent to such successor
administrative bank by the Borrowers, such consent not to be unreasonably
withheld, or (ii) if a successor administrative bank shall not be so appointed
and approved within the thirty (30) day period following the Administrative
Bank's notice to the Banks of its resignation, then the Administrative Bank
shall appoint, with the consent of the Borrowers, such consent not to be
unreasonably withheld, a successor administrative bank who shall serve as
Administrative Bank until such time as the Banks appoint, and the Borrowers
consent, which consent shall not be unreasonably withheld, to the appointment of
a successor administrative bank. Upon its appointment pursuant to either clause
(i) or (ii) above, such successor administrative bank shall succeed to the
rights, powers and duties of the Administrative Bank and the term
"Administrative Bank" shall mean such successor administrative bank, effective
upon its appointment, and the former Administrative Bank's rights, powers and
duties as Administrative Bank shall be terminated without any other or further
act or deed on the part of such former Administrative Bank or any of the other
parties to this Loan Agreement. After the resignation of any Administrative Bank
hereunder, the provisions of this Section 11 shall not by reason of such
resignation be deemed to release the Administrative Bank from liability for any
actions taken or not taken by it while it was the Administrative Bank under this
Loan Agreement.
11.14 Calculations. In the absence of gross negligence or willful
misconduct, the Administrative Bank shall not be liable for any error in
computing the amount payable to any Bank whether in respect of the Revolving
Credit Loans or the fees or other amounts due to the Banks under this Loan
Agreement. In the event an error in computing any amount payable to any Bank is
made, the Administrative Bank, the Borrowers and each affected
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Bank shall, forthwith upon discovery of such error, make such adjustments as
shall be required to correct such error, and any compensation therefor will be
calculated at the Federal Funds Effective Rate.
11.15 Beneficiaries. Except as set forth in Sections 11.5 and 11.13
hereof, the pro visions of this section 11 are solely for the benefit of the
Administrative Bank and the Banks, and the Borrowers shall not have any right to
rely on or enforce any of the provisions hereof. In performing its functions and
duties under this Loan Agreement, the Administrative Bank shall act solely as
agent of the Banks and does not assume and shall not be deemed to have assumed
any obligation toward or relationship of agency or trust with or for the
Borrowers or any other Person.
SECTION 12
ASSIGNMENTS AND PARTICIPATIONS
A. Assignments to Eligible Assignees. Each Bank shall have the
right at any time, with the prior consent of the Borrowers and the
Administrative Bank, which shall not be unreasonably withheld, to sell, assign,
transfer or negotiate all or any part of its Revolving Loan Commitment and
Revolving Credit Loans in a minimum amount of Five Million Dollars ($5,000,000)
to one or more commercial banks, insurance companies, savings and loan
associations, savings banks or other financial institutions, pension funds or
mutual funds or other accredited investors ("Eligible Assignees"); provided that
prior to receiving any confidential or other material information regarding the
Borrowers or the transactions contemplated by this Loan Agreement, any Eligible
Assignee shall have entered into a Confidentiality Agreement; provided further
that any such assignment shall become effective five (5) Business Days after an
Assignment Agreement is executed by the Eligible Assignee. In the case of any
sale, assignment, transfer or negotiation of all or part of the Revolving Loan
Commitment or Revolving Credit Loans authorized under this Section 12, the
assignee, transferee or recipient shall have, to the extent of such sale,
assignment, transfer or negotiation, the same rights, benefits and obligations
as it would if it were a Bank hereunder, including, without limitation (x) the
right to approve or disapprove actions which, in accordance with the terms
hereof, require the approval of the Banks, and (y) the obligation to fund
Revolving Credit Loans pursuant to Section 2 hereof. The Bank assigning a
portion or all of its Revolving Loan Commitment and Revolving Credit Loans
pursuant to this Section 12, or the bank purchasing the interest of the
Assigning Bank, shall pay a fee to the Administrative Bank of $3,500.
B. Participations. Notwithstanding Section 12.A hereof, each Bank
may grant participations in all or any part of its Revolving Loan Commitment and
Revolving Credit Loans to one or more Eligible Assignees; provided that (i) any
such disposition shall not, without the consent of the Borrowers, require the
Borrowers to file a registration statement with the Securities and Exchange
Commission or apply to qualify the Revolving Credit Loans or the Revolving
Credit Notes under the blue sky law of any state; and (ii) the holder of any
such participation, other than an Affiliate of such Bank, shall not be entitled
to
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require the Banks to take or omit to take any action hereunder except action
directly extending the final maturity of any portion of the principal amount of
or interest on a Revolving Credit Loan allocated to such participation or a
reduction of the principal amount of or the rate of interest payable on the
Revolving Credit Loans allocated to such participation. For purposes of Sections
2.6, 3.6 and 11.2 hereof, the Borrowers hereby acknowledge and agree that any
such disposition will give rise to a direct obligation of the Borrowers to the
participant and the participant shall be considered to be a "Bank" (subject to
the provisions of Section 5 hereof).
C. Assignments to Affiliates. Notwithstanding the foregoing
provisions of this Section 12, each Bank may at any time sell, assign, transfer,
or negotiate all or any part of its Revolving Loan Commitment and Revolving
Credit Loans to any Affiliate of such Bank; Provided that an Affiliate to whom
such disposition has been made shall not be considered a "Bank" for purposes of
this Loan Agreement other than for purposes of Section 10.2 hereof; provided
further that the Borrowers shall not incur any additional expenses solely as a
result of such sale, assignment, transfer or negotiation.
D. No Release of Obligations. No Bank shall, as between the
Borrowers and such Bank, be relieved of any of its obligations hereunder as a
result of any granting of participations in all or any part of its Revolving
Loan Commitment and Revolving Credit Loans. Each Bank shall, as between the
Borrowers and such Bank, be relieved of its obligations hereunder as a result of
any sale, assignment, transfer or negotiation of all or any part of its
Revolving Loan Commitment and Revolving Credit Loans made in accordance with
Section 12.A hereof.
SECTION 13
INDEMNITY
The Borrowers shall indemnify and hold harmless each Bank and its
successors, assigns, agents and employees from and against any and all claims,
actions, suits, proceedings, costs, expenses, damages, fines, penalties and
liabilities, including, without limitation, reasonable attorneys' fees and
costs, arising out of, connected with or resulting from the operation of the
business of the Borrowers.
SECTION 14
NOTICES
All notices required or permitted to be given hereunder shall be given
in writing and shall be personally delivered or sent by facsimile transmission
or by registered or certified United States mail, return receipt requested,
postage prepaid, addressed as follows (or to such other address as to which any
party hereto shall have given the other parties written notice):
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If to ResCare and
the Other Borrowers: Res-Care, Inc.
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
If to the Banks: PNC Bank, Kentucky, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇. ▇▇▇ ▇▇▇▇▇▇▇▇▇▇
National City Bank of Kentucky
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇. ▇▇▇▇▇ ▇▇▇▇▇
SunTrust Bank, Nashville, N.A.
▇.▇. ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: Ms. ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Bank One, Kentucky, NA
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇. ▇▇▇▇ ▇▇▇▇▇▇
If to the
Administrative Bank: PNC Bank, Kentucky, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇. ▇▇▇ ▇▇▇▇▇▇▇▇▇▇
All notices hereunder shall be deemed given upon the earlier of (i)
actual delivery in person or by facsimile transmission, or (ii) two (2) Business
Days after having been deposited in the United States mails, in accordance with
the foregoing.
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SECTION 15
MISCELLANEOUS
15.1 Joint and Several Liability of Borrowers; Limitation on Liability
of Consolidated Subsidiary Borrowers. The obligation of each of the Borrowers
for repayment of all unpaid principal of and interest on Revolving Credit Loans
and all other Obligations to the Banks and for repayment of all unpaid principal
of and interest on the Swing Line Loans and all other Obligations to PNC shall
be joint and several; provided, however, that the obligation of any particular
Borrower that is a Consolidated Subsidiary for repayment of all unpaid principal
of and interest on Revolving Credit Loans and all other Obligations to the Banks
and for repayment of all unpaid principal of and interest on the Swing Line
Loans and all other Obligations to PNC shall be limited to an amount not to
exceed the greater of (a) the aggregate amount of the outstanding Advances to
such Consolidated Subsidiary as of the Enforcement Date, or (b) ninety-five
percent (95%) of the Maximum Consolidated Subsidiary Borrower Amount as of the
Enforcement Date. The foregoing limitation on the obligation of the Borrowers
for repayment of all unpaid principal of and interest on Revolving Credit Loans
and all other Obligations to the Banks and for repayment of all unpaid principal
of and interest on the Swing Line Loans and all other Obligations to PNC shall
not be applicable to Res-Care, whose liability therefor shall not be limited.
15.2 Ratable Sharing. Each Bank agrees with the other Bank that (i) with
respect to all amounts received by it which are applicable to the payment of
principal of or interest on the Revolving Credit Loans and the Revolving Credit
Facility Commitment Fees, including, without limitation, all amounts received by
such Bank pursuant to the exercise of the right of setoff pursuant to Section
11.2 hereof, equitable adjustment will be made so that, in effect, all such
amounts will be shared among the Banks proportionately in accordance with their
respective Revolving Credit Facility Pro Rata Shares, whether received by
voluntary payment, by the exercise of the right of set-off or banker's lien, by
counterclaim or cross action or by the enforcement of any or all of the
Obligations, and (ii) if any of them shall exercise any right of counterclaim,
set-off, banker's lien or similar right with respect to amounts owed by the
Borrowers hereunder, that Bank shall apportion the amount recovered as a result
of the exercise of such right pro rata in accordance with (a) all amounts
outstanding at such time owed by the Borrowers to it hereunder with respect to
the Revolving Credit Loans, and (b) all amounts otherwise owed by the Borrowers
to it, and (iii) if any of them shall thereby through the exercise of any right
of counterclaim, set-off, banker's lien or otherwise, or as adequate protection
of a deposit treated as cash collateral under the Bankruptcy Code, receive
payment or reduction of a proportion of the aggregate amount of principal and
interest due with respect to the Revolving Credit Loans made by that Bank or any
participation therein, or any other amount payable hereunder (collectively, the
"Aggregate Amount Due" to such Bank), which is greater than the proportion
received by any other Bank in respect of the Aggregate Amount Due to such other
Bank, then the Bank receiving such proportionately greater payment shall (y)
notify each other Bank and the Administrative Bank of such receipt and (z)
purchase participations (which it shall be deemed to have done simultaneously
upon the receipt of such payment) in the Aggregate Amounts Due to the other
Banks so that all recoveries of Aggregate Amounts Due shall be shared by
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75
the Banks in proportion to their respective Revolving Credit Facility Pro Rata
Shares; provided that if all or part of such proportionately greater payment
received by such purchasing Bank is thereafter recovered from such Bank, those
purchases shall be rescinded and the purchase prices paid for such
participations shall be returned to that Bank to the extent of such recovery,
but without interest. The Borrowers expressly consent to the foregoing
arrangements and agree that any participant in respect of any Revolving Credit
Loan may exercise any and all rights of banker's lien, set-off or counterclaim
with respect to any and all rights of banker's lien, set-off or counterclaim
with respect to any and all monies owing by the Borrowers to that participant as
fully as if that participant were a Bank in the amount of such participation
held by that participant.
15.3 Waiver. No course of dealing in respect of, nor any omission or
delay in the exercise of, any right, power, remedy or privilege by the Banks
shall operate as a wavier thereof, nor shall any right, power, remedy or
privilege of the Banks be exclusive of any other right, power, remedy or
privilege referred to herein or in any related document or now or hereafter
available at law, in equity, in bankruptcy, by statute or otherwise. Each such
right, power, remedy or privilege may be exercised by the Banks, either
independently or concurrently with others, and as often and in such order as the
Banks may deem expedient. No waiver or consent granted by the Banks in respect
of this Loan Agreement or the other Loan Instruments shall be binding upon the
Banks unless specifically granted in writing by a duly authorized officer of
each Bank, which writing shall be strictly construed.
15.4 Survival of Representations and Warranties. All representations,
warranties and covenants of the Borrowers and each Bank contained herein or made
pursuant hereto shall survive the execution and delivery of this Loan Agreement
and shall continue throughout the term hereof. Further, the indemnities set
forth in Section 13 hereof shall survive the payment of the Revolving Credit
Notes and the other Obligations to the Banks, as applicable.
15.5 Invalidity. If any part of this Loan Agreement shall be adjudged
invalid or unenforceable, whether in general or in any particular circumstance,
then such partial invalidity or enforceability shall not cause the remainder of
this Loan Agreement to be or to become invalid or unenforceable, and if a
provision hereof is held invalid or unenforceable in one or more of its
applications, the parties hereto agree that said provision shall remain in
effect in all valid applications that are severable from the invalid or
unenforceable application or applications.
15.6 Assignment. This Loan Agreement may not be assigned by the
Borrowers without the prior written consent of the Banks. This Loan Agreement
may be assigned by the Banks as provided in Section 12 hereof. All rights of the
Banks hereunder shall inure to the benefit of their respective successors and
assigns, and all obligations, covenants and agreements of the Borrowers shall
bind their permitted successors and assigns, if any.
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76
15.7 Governing Law. This Loan Agreement and the rights and obligations
of the parties hereunder shall, in all respects, be governed by and construed in
accordance with the laws of the Commonwealth of Kentucky.
15.8 Section Headings. The section headings of this Loan Agreement are
inserted herein solely for convenience of reference and shall not affect the
construction or interpretation of the provisions hereof.
15.9 Entire Agreement. This Loan Agreement and the other Loan
Instruments constitute the entire agreement between the Borrowers and the Banks
with respect to the subject matter hereof.
15.10 Time of the Essence. Time shall be of the essence in the payment
and performance of all of the Borrowers' obligations under this Loan Agreement,
the Revolving Credit Note and the other Loan Instruments to which the Borrowers
are party.
15.11 Modifications. This Loan Agreement may be modified only in writing
executed by the Borrowers and the Banks. Neither this Loan Agreement nor the
other Loan Instruments nor any terms hereof or thereof may be changed, waived,
discharged or terminated unless such change, waiver, discharge or termination is
in writing signed by Banks holding at least sixty six and 66/100 percent (66
2/3%) of the aggregate of the Revolving Credit Facility Pro Rata Shares (the
"Majority Banks"); provided, however, that no such change, waiver, discharge or
termination, shall, without the consent of each Bank, (i) extend the Revolving
Loan Commitment Termination Date or the final maturity of the Revolving Credit
Note of such Bank, or change the rate or extend the time of payment of interest,
principal or fees, or reduce the principal amount thereof, or increase the
aggregate amount of the Revolving Loan Commitments above the maximum amount
provided for in Section 2.1 hereof, or increase any Bank's commitment to
disburse its Revolving Loan Pro Rata Share of Revolving Credit Loans requested
by the Borrowers as set forth in Section 2.1 hereof, or (ii) release any
Collateral except as it shall otherwise be provided in any Loan Instrument, or
(iii) amend, modify or waive any provisions of this Section 15.12
(Modifications), Section 2 (Revolving Credit Facility), Section 3 (Swing Line
Credit Facility), Section 10 (Events of Default; Acceleration), Section 11
(Remedies Upon Default, Etc.), Section 12 (The Administrative Bank), Section
15.2 (Ratable Sharing), or Section 15.10 (Costs and Expenses), or (iv) amend,
modify or waive any provision requiring consent of all Banks, or (v) reduce the
percentages specified in this Section 15.11 or (vi) consent to the assignment or
transfer by the Borrowers of any of their rights and obligations under this
Agreement.
15.12 Submission to Jurisdiction, Etc. The Borrowers hereby irrevocably
agree that any legal action, suit or proceeding against the Borrowers with
respect to the obligations and liabilities of the Borrowers hereunder or any
other matter under or arising out of or in connection with this Loan Agreement,
the Revolving Credit Notes, the Swing Line Note or any other Loan Instrument or
for recognition or enforcement of any judgment rendered in any such action, suit
or proceeding may be brought in the United States District Court of the
- ▇▇ -
▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ of Kentucky or in the courts of the Commonwealth of Kentucky,
as the Banks may elect, and, by execution and delivery of this Loan Agreement,
the Borrowers hereby irrevocably accept and submit to the non-exclusive
jurisdiction of each of the aforesaid courts in personam generally and
unconditionally with respect to any such action, suit or proceeding involving
the Borrowers and in respect of the Borrowers' property. The Borrowers further
agree that final judgment against the Borrowers in any action, suit or
proceeding referred to herein shall be conclusive after all appeals have been
exhausted or waived by the Borrowers, and may thereafter be enforced in any
other jurisdiction, within or outside the United States of America, by suit on
the judgment, a certified or exemplified copy of which shall be conclusive
evidence of the fact and of the amount of the Borrowers' obligations and
liabilities. The Borrowers further irrevocably consent and agree to the service
of any and all legal process, summons, notices and documents out of any of the
aforesaid courts in any such action, suit or proceeding by mailing copies
thereof by registered or certified air mail, postage prepaid, to the Borrowers
at the address set forth in Section 14 hereof or by serving copies thereof upon
any statutory agent for service of process of the Borrowers. The Borrowers agree
that service upon the Borrowers as provided for herein shall constitute valid
and effective personal service upon the Borrowers and that the failure of any
statutory agent to give any notice of such service to the Borrowers shall not
impair or affect in any way the validity of such service or any judgment
rendered in any action or proceeding based thereon. Nothing herein shall, or
shall be construed so as to, limit the right of the Banks to bring actions,
suits or proceedings with respect to the obligations and liabilities of the
Borrowers under, or any other matter arising out of or in connection with, this
Loan Agreement, the Revolving Credit Notes, the Swing Line Note and/or the other
Loan Instruments, or for recognition or enforcement of any judgment rendered in
any such action, suit or proceeding, in the courts of whatever jurisdiction in
which property of the Borrowers may be found or as otherwise shall to the Banks
seem appropriate, or to affect the right to service of process in any
jurisdiction in any manner permitted by law. In addition, the Borrowers hereby
irrevocably and unconditionally waive any objection which the Borrowers may now
or hereafter have to the laying of venue of any of the aforesaid actions, suits
or proceedings arising out of or in connection with this Loan Agreement, the
Revolving Credit Notes, the Swing Line Note and/or the other Loan Instruments
brought in the Circuit Court of Jefferson County, Kentucky or in the United
States District Court for the Western District of Kentucky, and hereby further
irrevocably and unconditionally waives and agrees not to plead or claim that any
such action, suit or proceeding brought in either such court has been brought in
an inconvenient forum.
15.13 Waiver of Jury Trial. EACH BORROWER, EACH BANK AND THE
ADMINISTRATIVE BANK EACH HEREBY AGREES TO WAIVE ITS RIGHT TO A JURY TRIAL OF ANY
CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS LOAN AGREEMENT, THE
REVOLVING CREDIT NOTES, THE SWING LINE NOTE OR THE OTHER LOAN INSTRUMENTS. THE
SCOPE OF THIS WAIVER IS INTENDED TO BE ALL-ENCOMPASSING OF ANY AND ALL DISPUTES
THAT MAY BE FILED IN ANY COURT THAT RELATE TO THE SUBJECT MATTER OF THIS
TRANSACTION, INCLUDING, WITHOUT LIMITATION, CONTRACT CLAIMS, TORT CLAIMS, BREACH
OF DUTY CLAIMS, AND ALL OTHER COMMON LAW
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78
AND STATUTORY CLAIMS. THE BORROWER, EACH BANK AND THE ADMINISTRATIVE BANK EACH
ACKNOWLEDGES THAT THIS WAIVER IS A MATERIAL INDUCEMENT FOR EACH SUCH PARTY TO
ENTER INTO A BUSINESS RELATIONSHIP, AND THAT EACH BORROWER, EACH BANK AND THE
ADMINISTRATIVE BANK HAVE ALREADY RELIED ON THE WAIVER IN ITS RELATED FUTURE
DEALINGS WITH THE OTHERS. THE BORROWER, EACH BANK AND THE ADMINISTRATIVE BANK
EACH FURTHER WARRANTS AND REPRESENTS THAT EACH HAS REVIEWED THIS WAIVER WITH ITS
LEGAL COUNSEL, AND THAT EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL
RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. THIS WAIVER IS IRREVOCABLE,
MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING, AND THIS WAIVER
SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS
TO THIS LOAN AGREEMENT, THE REVOLVING CREDIT NOTES, THE SWING LINE NOTE OR THE
OTHER LOAN INSTRUMENTS. IN THE EVENT OF LITIGATION, THIS LOAN AGREEMENT MAY BE
FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.
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IN WITNESS WHEREOF, the Administrative Bank, the Banks and the Borrowers
have caused this Loan Agreement to be duly executed as of the day and year first
above written.
PNC BANK, KENTUCKY, INC.
("PNC")
________________________________________
By: ▇▇▇ ▇▇▇▇▇▇▇▇▇▇, Vice President
NATIONAL CITY BANK OF
KENTUCKY
("National City")
________________________________________
By: ▇▇▇▇▇ ▇▇▇▇▇, Vice President
SUNTRUST BANK, NASHVILLE, N.A.
("SunTrust")
________________________________________
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Group Vice President
BANK ONE, KENTUCKY, NA
("Bank One")
________________________________________
▇▇▇▇ ▇. ▇▇▇▇▇▇, Senior Vice President
PNC BANK, KENTUCKY, INC.
(the "Administrative Bank")
________________________________________
By: ▇▇▇ ▇▇▇▇▇▇▇▇▇▇, Vice President
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80
RES-CARE, INC.
(a "Borrower")
________________________________________
By: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, President and
Chief Executive Officer
COMMUNITY ALTERNATIVES
INDIANA, INC.
(a "Borrower")
________________________________________
By: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, President
COMMUNITY ALTERNATIVES
NEBRASKA, INC.
(a "Borrower")
________________________________________
By: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, President
COMMUNITY ADVANTAGE, INC.
(a "Borrower")
________________________________________
By: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, President
TEXAS HOME MANAGEMENT, INC.
(a "Borrower")
________________________________________
By: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, President
CAPITAL TX INVESTMENTS, INC.
(a "Borrower")
________________________________________
By: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, President
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81
THM HOMES, INC.
(a "Borrower")
________________________________________
By: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, President
RSCR TEXAS, INC.
(a "Borrower")
________________________________________
By: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, President
RES-CARE NEW MEXICO, INC.
(a "Borrower")
________________________________________
By: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, President
RES-CARE OHIO, INC.
(a "Borrower")
________________________________________
By: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, President
COMMUNITY ALTERNATIVES OF
TEXAS, INC.
(a "Borrower")
________________________________________
By: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, President
CATX PROPERTIES, INC.
(a "Borrower")
________________________________________
By: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, President
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82
RES-CARE CALIFORNIA, INC., d/b/a
RCCA Services
(a "Borrower")
________________________________________
By: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, President
RES-CARE FLORIDA, INC.
(a "Borrower")
________________________________________
By: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, President
RSCR CALIFORNIA, INC.
(a "Borrower")
________________________________________
By: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, President
RES-CARE KANSAS, INC.
(a "Borrower")
________________________________________
By: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, President
RES-CARE ILLINOIS, INC.
(a "Borrower")
________________________________________
By: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, President
RES-CARE OKLAHOMA, INC.
(a "Borrower")
________________________________________
By: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, President
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83
RES-CARE TENNESSEE, INC.
(a "Borrower")
________________________________________
By: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, President
RES-CARE TRAINING
TECHNOLOGIES, INC.
(a "Borrower")
________________________________________
By: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, President
YOUTHTRACK, INC.
(a "Borrower")
________________________________________
By: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Chairman
RES-CARE PREMIER, INC.
(a "Borrower")
________________________________________
By: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, President
RSCR PREMIER, INC.
(a "Borrower")
________________________________________
By: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, President
RES-CARE NEW JERSEY, INC.
(a "Borrower")
________________________________________
By: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, President
- 83 -
84
COMMUNITY ALTERNATIVES
KENTUCKY, INC.
(a "Borrower")
________________________________________
By: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, President
ALTERNATIVE YOUTH SERVICES,
INC.
(a "Borrower")
________________________________________
By: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, President
COMMUNITY ALTERNATIVES
VIRGINIA, INC.
(a "Borrower")
________________________________________
By: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, President
RESIDENTIAL ALTERNATIVES
IN SUPPORTIVE ENVIRONMENTS,
INC.
(a "Maker")
________________________________________
By: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, President
SOUTHWIND RESIDENTIAL
SERVICES, INC.
(a "Maker")
________________________________________
By: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, President
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85
LIST OF EXHIBITS
1. Exhibit A-1: PNC Revolving Credit Note
Exhibit A-2: National City Revolving Credit Note
Exhibit A-3: SunTrust Revolving Credit Note
Exhibit A-4: Bank One Revolving Credit Note
2. Exhibit B: Swing Line Note
3. Exhibit C: Application and Agreement for Letter of Credit
4. Exhibit D: Notice of Conversion/Continuation
6. Exhibit E: Request For Revolving Credit Loan
7. Exhibit F: Request for Swing Line Loan
8. Exhibit G: Compliance Certificate
9. Exhibit H: Assignment Agreement
10. Exhibit I: Confidentiality Agreement
11. Exhibit J: Stock Pledge Agreement
12. Exhibit K: Form of Security Agreement
13. Exhibit L: Form of UCC-1 Financing Statement
14. Exhibit M: Form of Assumption Agreement
13. Exhibit N: Form of Amendment to Stock Pledge Agreement
14. Exhibit O: Form of Stock Pledge Agreement (Shares in Non-Consolidated
Persons)
14. Exhibit P: Form of Borrower Counsel Opinion